Loan Modification and Your Credit Score

Many homeowners facing foreclosure find that they do not have a lot of options at their disposal. Plummeting real estate values have eaten up their hard earned equity. Even if they do have some equity, stricter lending requirements have made qualified buyers a rare commodity. Foreclosure, short sale, or deed in lieu of can be brutal on the average homeowners credit score. If you can’t or don’t want to sell your home and are unable to get a better paying job “개인돈대출” you should focus on staying put and making your home payments more affordable. Enter the world of the loan modification.

Loan Modification Defined

A loan modification is a process whereby the mortgage lender modifies the terms of the original mortgage. The negotiations are done in-house by the mortgage servicer. The end product is typically a lower interest rate, and often times, longer mortgage term in order to bring the delinquent loan current. Once the loan is current again, the modification ensures that future mortgage payments are more affordable for the borrower.

The United States government has a modification program known as HAMP (Home Affordable Modification Program) which is designed to encourage lenders to attempt to modify loans in their portfolio. For each loan successfully modified the HAMP program, the lender receive stimulus money from the government. The borrower receives the benefit of a newly modified loan complete with low interest rate and escrow account, and the lender receives cash for its efforts. The promise of cash brings the lender to the negotiating table where they might not otherwise be.

Impact of Modification

Most lenders will not consider a HAMP or in house modification unless the loan is in a delinquent status. This simple fact can discourage many consumers from even asking about a modification. Consider that while a couple of late payments can hurt your credit, your credit can be hurt far more by a foreclosure. Your credit can also benefit far more once the modification is complete, and the lower mortgage payment decreases your debt to income ratio. If you are considering a loan modification, seek financial advice, and contact your loan servicer and seek the help of a loan modification attorney to discuss the details, and to get started on the required paperwork.

Beginning the Process

Most lenders are familiar with the modification process. Contact your lender, and let them know that you would like to modify your loan and if you have any questions you may seek assistance from a loan modification lawyer as well. An experienced attorney knows the ins and outs of the process. The process begins by filling out an application, and providing your lender with required financial documents such as bank statements and tax returns. Expect the process to take approximately 8 weeks. Once complete, your lender will forward the final paperwork to be signed. Make your mortgage payments as agreed to in your new modification and your credit score may not take a beating however each individual is different and there are many variables that will determine whether or not your credit score is affected. These variables include how delinquent you were in making home loan payments prior to the modification and whether or not the account has been reported as paid for less than owed, which is not a good rating.

We are a group of loan modification attorneys helping homeowners legally save their homes since 2007. Our mission is to get through these tough economic times by helping homeowners stay in their homes. A loan modification is for homeowners who have experienced a financial hardship and need to restructure their mortgages to make their payments more affordable.