The Federal Housing Administration will require mortgage servicers to place specific borrowers into trial modifications before collecting a fee for the workout. According to a lender letter sent Aug. 15, servicers must apply the new trial modification standards on Oct. 1. The trials will become a prerequisite for a lender to execute a permanent modification. At the end of June, lenders reported more than 584,000 FHA mortgages in serious delinquency, bankruptcy or foreclosure, up 1% from the previous month and 6.1% from one year ago. Under the new standards, a trial modification is required for borrowers who missed one mortgage payment at least twice in the past year. Additional qualifications include borrowers who fell 90-days delinquent in the past three years, defaulted within 90 days of the last foreclosure prevention workout, or spend more than 80% of their income on debt repayments. A trial modification is also required if the loan was originated less than 14 months before the borrower requested assistance and if the amount added to the loan balance after modification exceeds 10% of the unpaid principal balance. Borrowers who fail out of a Home Affordable Modificaiton Program trial would also require an FHA trial before a permanent modification. Like HAMP, the FHA trials will last three months, and any foreclosure action must be suspended. If the trial fails, according to the letter, the servicer must wait another 90 days before recommencing the foreclosure – even if the borrower vacates the property. If a trial is required, servicers can receive a $750 fee if a permanent modification is granted with 60 days of a finished trial period. Write to Jon Prior. Follow him on Twitter @JonAPrior