Effective June 1, 2010 new provisions designed to speed up the process of getting struggling home owners into mortgage modifications they can afford will be in place. Homeowners must supply an initial package of documents before the first phase of a modification can begin.

The plan also requires that lenders review the documentaton and respond with an approval or rejection within 30 days and outlines how lenders must convert a trial modification into a premanent one.

A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable. To get the payment down, lenders lower the interest rate, extend the loan term, reduce the principal or use any combination of those approaches. Reducing the principal is rare, but there is a push afoot to encourage more principal reductions.