Loan Mod approved now bank tells us not to make next 2 payments...?


We got a call a few days ago that our traditional loan modification was approved (it took 60 days and we made the regular payments in the interim) and that our first payment would be in November.

Well about an hour later the bank called again to say they just saw that we had made our September payment so they would reverse it out and apply it to November's payment as September and October had already been capitalized into the new loan.

Does this sound right? I have heard stories about banks telling their clients not to make monthly payments but does this apply only to a "trial period"? No reference to a trial period has been made by either party during this modification process?

Do I trust the bank in this? Or are they going to say later that we were delinquent? We have to have paperwork notarized tomorrow and it makes us very nervous to be told not to make October's and possibly November's payment.

Thank you,

Mortgage Loan Modification Answer:

From what you mentioned above, your lender has "capitalized your September and October payments", meaning they've added them onto their new calculation for your new loan principal amount.

As long as this is stated on your loan modification agreement, then it should be ok. If not, make sure that it is mentioned in writing that they've asked you not to make your September and October payments.

It is industry practice for banks to record phone conversations, but written agreements should be given for any changes to payment schedules, so make sure you ask for it if it's not already a part of the loan mod agreement (trial or otherwise).

Congratulations and best of luck to you!

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Oct 21, 2011
Loan Mod approved now bank tells us not to make next 2 payments...?
by: Dean - St Louis

Yes, that is correct. Happens all the time. However, I would follow up in a couple of weeks by obtaining a loan history so you can see that the payments were in fact applied correctly and that the loan balance in the history agrees with the modification.

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