We receive several questions about how a loan modification may effect credit scores.
Even though we have heard many horror stories about lenders requiring a homeowner to be 90 days late on a mortgage before the bank will consider negotiating a fair loan modification solution, there is new hope to save your credit with the Obama Administration’s Making Home Affordable Program.
While “proof” of imminent delinquency may be best acknowledged by a bank in the form of a homeowner missing several payments, the threat of a job loss, adjusting payment terms or other hardships may be all a lender needs to be presented with in order to consider an approval for a mortgage modification.
Unfortunately, when lenders steer homeowners down the path of missing payments will end up damaging their credit scores. Late payments that result in a Notice of Default after 90 days have a significant negative impact on credit, and will create challenges in the future for mortgage purchase or refinance approvals, rental applications, as well as limit available funds on current credit cards.
If you have been tricked into going late on your mortgage payments just to save your home, a good attorney backed Loan Modification Company could influence your lender to erase their negative reports to the credit bureaus with the threat of litigation.
Since, a successful loan modification does not require a homeowner to be late on their mortgage for approval, there is hope to preserve your credit score. A loan modification is simply a re-negotiation of the terms of your mortgage with your current lender.
Whether it is a reduced interest rate, longer term, or a principle forbearance, the main objective of a loan modification is to create an affordable mortgage payment that fits the borrower’s current life scenario.
Establishing a timely mortgage payment history may actually help improve credit scores, especially if it makes things easier to pay other monthly credit obligations.
With regards to the 90 day trial period for the Making Home Affordable Program, it is important to make sure that your lender/servicer does not report your mortgage payments late while they review your case for approval.
This can be taken care of by having the lender/servicer sign a notarized document stating that they will continue to report your monthly mortgage payment “As Agreed” while you are going through the loan modification negotiation process.
Even though a short sale, foreclosure, or short refinance may have a negative effect on your credit score, a well negotiated loan modification will actually help to improve your credit standing over time.
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With No Up-Front Fees, our clients only pay for Results.
Call us today if you have questions about packaging and
submitting a Loan Modification request.
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