| With so many homeowners going through the worst | | | | your credit rating. You will simply be changing the |
| economic crisis they have known, people are | | | | terms of your mortgage. This will be written in legal |
| wondering if their credit will also make it through these | | | | documentation which will be recorded in the records of |
| troubling times. What's also troubling is, apart from the | | | | your county, but other than that, there would be no |
| great depression, most banks have never been | | | | other information to report to a credit bureau. |
| through this type of economic crisis either. So the | | | | So the short answer to this question is a loan |
| answer to these questions can be somewhat elusive. | | | | modification will not affect your credit in a negative |
| Most banks, if not all of them are unsure how to | | | | way! As a matter of fact, a loan modification has the |
| handle the loan default crisis or how to report different | | | | effect of "bringing the homeowner current" on the |
| modifications to the credit agencies. At the moment, | | | | mortgage! Effectively, a modification of terms is like |
| there is no standardized reporting criterion. And since | | | | having a new start, because all the delinquent |
| there is so much confusion, Banks have not set firm | | | | payments are accounted for! And despite the |
| rules. So what's the answer to the question, "How | | | | confusion, most banks will report the loan as current, |
| does a loan modification affect my credit?" | | | | once it is modified! |
| Well, to begin with, if you have fallen behind on your | | | | With so many foreclosures affecting homeowners |
| loan and your payments are past thirty days, your | | | | today it is uncertain whether the credit bureaus and |
| mortgage will be in default. Your lender will have | | | | banks will revise their reporting criteria. This whole loan |
| reported this to the credit bureaus and this will already | | | | modification experiment will have to be a case study |
| have affected your credit. How much your credit is | | | | on its own. Only time will tell where the chips will fall, |
| damaged depends on the length of your delinquency. | | | | and what new financial instruments will need to be |
| Also, it is important to note, that if you are on a trial | | | | created! |
| loan modification and you have not been making | | | | Imagine what will happen in three or four years time, |
| payments previously, your loan will still be reported as | | | | when families are going to be seeking the American |
| delinquent until your trial period is over (which is usually | | | | Dream once again! Banks may be faced with a |
| about three months), and the loan modification | | | | scenario where as much as three out of every five |
| agreement is fulfilled. Unfortunately, this will be the case | | | | loan files presented to them for a potential mortgage |
| even if you make the trial period payments on time. | | | | has a previous foreclosure. Are they going to say no |
| Homeowners who are not late on their payments but | | | | to all these files or look past the foreclosure and see if |
| are struggling with their mortgage, may qualify for a | | | | you have been current on your bills and credit report |
| refinance or modification. So if you are not behind on | | | | since the foreclosure? |
| your mortgage, modifying your loan should not affect | | | | |