CNN usually gets it right. But the headline about mortgage modification hurting the distressed homeowner’s credit score is misleading enough to be innaccurate. The headline states. “Mortgage modification hurts your credit” Not quite. But one has to read the answer to the submitted question to get it.
The question is simple enough, does a mortgage modification hurt one’s credit score. Notable is that when this question is put to a lender, the answer is just misleading enough to be subterfuge, Of course, one should expect little else from a lender.
Right from the top, your lender is the wrong one to ask. The person you ask doesn’t know anymore about credit scores than the homeowner does. The person on the phone is not the one who does the actual reporting.
What is too bad is that the reporter, in this case CNN’s Jen Haley or Gerri Willis, doesn’t know enough more to answer accurately either. Their answer is: “Many lenders are reporting loan modifications as “partial payment plans,” which is considered negative by the FICO score. This changed in November of 2010, when lenders started reporting them as a “loan modification under a government program,” which is not considered negative by FICO. So if you want to modify your mortgage loan then it might be a good idea to find out from your lender if this will negatively impact your FICO scores.”
Here’s the problem, lenders have three avilable workout solutions: reinstatement (which was most assuredly caused by delinquent payments), forebearance (also most asuredly the result of delinquent payments), and actual modification (which may or may not have been triggered by late payments). By the time the distressed homeowner, or harried columnist, asks what ought to be a simple question, these three options have been combined into a single, but not inclusive group. A modification by itself cannot hurt a score because new terms for the mortgage are written and become permanent. What accurately can and would hurt a score would be any late payments, a forebearance, or a reinstatement; depending on the terms. Not to be ignored is a lender underwriter who doesn’t have the time, or doesn’t care to be accurate.
Based on the limited information here, we don’t know if any of the above conditions were met. Now consider that the “sympathetic’ phone person at the bank is scripted to not encourage any modification anyway, and you have the prescription for innaccuracy.
In fact, the solution is to call Transunion 45 days after your first permanent mortgage modification payment and dispute your mortgage credit entry. Transunion will send a legal letter to your lender and your credit rating will improve immediately. Also, making on-time payments for the next year will fix any credit report damage.
I read this question a few times a month and now after having seen it numerous times, I suspect that the person submitting the question may not be a truly distressed homeowner. The borrower who truly needs a mortgage modification is not going to care one whit about their credit score. They’re worried about keeping their home. Who needs credit when you’re threatened with being homeless? The questioner is probably not desperate enough and wouldn’t qualify mor a mortgage modification anyway. Can you imagine the distressed homeowner standing in their soon-to-be foreclosed-upon kitchen, weighing a credit score drop and not making a mortgage payment?
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The internet being what it is, certain search terms need to be empahasized so that you can find the best information. The REST Report is best classified as loan modification software, or mortgage modification software. It’s claim to fame is that you use it to calculate Net Present Value exactly the way the banks do, using the same software. It is best used as a do it yourself loan modification or do it yourself mortgage modification. For some reason, loan modification 2010 and mortgage relief 2010 are popular search terms.
This YouTube video says it all. Go here: target="_blank">How to Get A Beneficial Loan Modification Now Please ‘Like’ the video, will you? That makes it easier for others to find.
Read it here
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Originally posted 2009-11-21 21:59:55. Republished by Blog Post Promoter
