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Can a loan modification ruin your fico score?

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limommer
LIF Adult

Member since 2/10

1073 total posts

Name:
Meredith

Can a loan modification ruin your fico score?

Was thinking about trying to go for a loan mod but concerned with the conciquences Chat Icon Any tips would be greatly appteciated

Posted 1/30/12 5:52 PM
 
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Beth Lowe at Coach Realtors
LIFamilies Business

Member since 4/10

281 total posts

Name:
Beth- Coach Realtors

Re: Can a loan modification ruin your fico score?

most people who need and qualify for a loan mod are late on their mortage

therefore the effects on your credit score is a non-issue

banks don't modify people who are current-

if you are able to pay your mortgage- you most likely wont qualify

I have been working with the banks for years and it's a rare they would approve an on time borrower- it's rare they approve anyone to be honest

Posted 1/30/12 9:44 PM
 

MommaG
Yay Spring!

Member since 5/05

5133 total posts

Name:
Gloria

Re: Can a loan modification ruin your fico score?

Actually, we always paid on time and we got a loan mod no problem. It took years off our mortgage and money off every month. Our bank said we could modify once per year if we wanted too.

Posted 1/31/12 8:54 PM
 

SummerBaby2012
LIF Infant

Member since 1/12

74 total posts

Name:
Michelle

Re: Can a loan modification ruin your fico score?

Do you qualify for a HARP loan?

Posted 1/31/12 9:12 PM
 

REKoz412
LIF Infant

Member since 5/10

148 total posts

Name:

Re: Can a loan modification ruin your fico score?

Add me to the list of those who got a loan mod while remaining current. I started the process when I saw that I would be unable to continue paying at that rate a few months down the road. Had to use my credit cards far more than I wanted to but I was determined to not fall behind while waiting for approval.
Honestly, that may not have mattered because if/when you do get approved, you are given a 3 month "trial period" to make sure you can pay at the reduced rate. And for some ridiculous reason, the bank reports that as partial payment which does effect your score.
My score has gone back up however since all the papers are signed and I am paying my new mortgage on time.
You do need to have what they consider valid reasons why your current mortgage is no longer doable. Something on the major life event scale ie; job loss, major illness (my issue), divorce (also my issue!) etc. and have a good credit history prior to all hell breaking loose!
I just heard that they are making the HARP loans (refinancing) even easier now. If you can go that way, it's definitely the better way to go.
Good luck!

Posted 2/1/12 12:15 PM
 

MommaG
Yay Spring!

Member since 5/05

5133 total posts

Name:
Gloria

Re: Can a loan modification ruin your fico score?

Posted by REKoz412

Add me to the list of those who got a loan mod while remaining current. I started the process when I saw that I would be unable to continue paying at that rate a few months down the road. Had to use my credit cards far more than I wanted to but I was determined to not fall behind while waiting for approval.
Honestly, that may not have mattered because if/when you do get approved, you are given a 3 month "trial period" to make sure you can pay at the reduced rate. And for some ridiculous reason, the bank reports that as partial payment which does effect your score.
My score has gone back up however since all the papers are signed and I am paying my new mortgage on time.
You do need to have what they consider valid reasons why your current mortgage is no longer doable. Something on the major life event scale ie; job loss, major illness (my issue), divorce (also my issue!) etc. and have a good credit history prior to all hell breaking loose!
I just heard that they are making the HARP loans (refinancing) even easier now. If you can go that way, it's definitely the better way to go.
Good luck!



See, my bank did not require any type of hardship reason for the loan mod. We just told them the rates are lower and we want to lower our payment and cut back on the remaining time as well. They had no problem with it and said we could do it every year. It's at a credit union so I don't know if that makes a difference.

Posted 2/1/12 10:20 PM
 

-Laurie-
Hi!

Member since 5/05

2536 total posts

Name:

Re: Can a loan modification ruin your fico score?

Can you ladies share what they gave you? BOA called me the other day about one finally. We had been trying since 2009. Did they add time to your mortgage? I'm just hoping for a rate reduction and possibly a principal reduction of the amount they made me pay in 2006 for a prepayment penalty.

I've paid tons of interest especially since it was interest only (stupid!) so I'm so scared of them setting the clock to 30 when it probably could be 20 with the current rates.

Posted 2/2/12 7:54 AM
 

LSP2005
Bunny kisses are so cute!

Member since 5/05

19453 total posts

Name:
L

Re: Can a loan modification ruin your fico score?

I would call to see if you are eligible to do a HARP loan.

Posted 2/2/12 8:02 AM
 

REKoz412
LIF Infant

Member since 5/10

148 total posts

Name:

Re: Can a loan modification ruin your fico score?

Posted by -Laurie-

Can you ladies share what they gave you? BOA called me the other day about one finally. We had been trying since 2009. Did they add time to your mortgage? I'm just hoping for a rate reduction and possibly a principal reduction of the amount they made me pay in 2006 for a prepayment penalty.

I've paid tons of interest especially since it was interest only (stupid!) so I'm so scared of them setting the clock to 30 when it probably could be 20 with the current rates.




Unfortunately for me, they did add time on the end. But they did put aside 50K as interest free. For the reasons stated, I HAD to go this way in order to stay in my house. My payments were reduced more than $800/month! Now, I couldn't even rent for less than I pay.

Loan Mods (HAMP) are NOT ideal and no bank is going to give you less for nothing! If you can refinance (HARP), it is definitely a better way to go. But when I went through the process last year, I couldn't reduce the payments enough through HARP. BTW. I went through BOA as well.

Posted 2/2/12 8:46 AM
 

nraboni
Uggh...

Member since 10/09

6905 total posts

Name:
Nicole

Re: Can a loan modification ruin your fico score?

FYI...HARP and HAMP are only available to you if you have a Freddie Mac or Fannie Mac loan. I just spoke to a mortgage consultant about this last night.

Has anyone tried a loan modification with CitiBank?

Posted 2/2/12 11:34 AM
 

GreenGirl05
LIF Adolescent

Member since 1/06

834 total posts

Name:
J

Re: Can a loan modification ruin your fico score?

We are getting a modification with BOA. We have not been late and luckily there is no hardship. Our current rate is 6.25!!! So, any less is going to be GREAT!!!

Posted 2/2/12 3:46 PM
 

checka
She's here!

Member since 5/05

1769 total posts

Name:
Me

Re: Can a loan modification ruin your fico score?


My coworker owed more money than his house was worth so couldn't refinance and he couldn't afford to keep paying his mortgage. They wouldn't do anything for him bec. at that point he was still current.

Posted by MommaG
See, my bank did not require any type of hardship reason for the loan mod. We just told them the rates are lower and we want to lower our payment and cut back on the remaining time as well. They had no problem with it and said we could do it every year. It's at a credit union so I don't know if that makes a difference.



You did a loan modification or refinance?

Message edited 2/2/2012 11:11:40 PM.

Posted 2/2/12 11:06 PM
 

MommaG
Yay Spring!

Member since 5/05

5133 total posts

Name:
Gloria

Re: Can a loan modification ruin your fico score?

Posted by checka


My coworker owed more money than his house was worth so couldn't refinance and he couldn't afford to keep paying his mortgage. They wouldn't do anything for him bec. at that point he was still current.

Posted by MommaG
See, my bank did not require any type of hardship reason for the loan mod. We just told them the rates are lower and we want to lower our payment and cut back on the remaining time as well. They had no problem with it and said we could do it every year. It's at a credit union so I don't know if that makes a difference.



You did a loan modification or refinance?



Loan modification. We thought of refinancing but this was much cheaper and easier.

Posted 2/3/12 1:32 PM
 

checka
She's here!

Member since 5/05

1769 total posts

Name:
Me

Re: Can a loan modification ruin your fico score?

Posted by MommaG

Posted by checka


My coworker owed more money than his house was worth so couldn't refinance and he couldn't afford to keep paying his mortgage. They wouldn't do anything for him bec. at that point he was still current.

Posted by MommaG
See, my bank did not require any type of hardship reason for the loan mod. We just told them the rates are lower and we want to lower our payment and cut back on the remaining time as well. They had no problem with it and said we could do it every year. It's at a credit union so I don't know if that makes a difference.



You did a loan modification or refinance?



Loan modification. We thought of refinancing but this was much cheaper and easier.



That's great your bank was flexible. My coworker had such a hard time.

Posted 2/3/12 7:42 PM
 
 

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