Credit Cards Center Credit cards from our partners
Reply
Regular Contributor
Posts: 183
Registered: ‎07-21-2007
0

How A Mortgage Modification (non HAMP or HASP) is reported and Scored

[ Edited ]

First ofa lkl I mentioned in another thread that NFCU had offered me a modification of my existing mortgage to use a lower interst rate (and therefore payment) for the remainder of the term.  There was a lot of misundertanding on this.  Some seemed to think that I was being offerend one of the types of relief mentioned in the subject line and other told me to make sure what type of refi they repoort (it is not a refi at all)

 

What NFCU told me they would do was to accomplish the mod and to report to the CRAs my new payment and nothing else just as they might do after the annual escow adjustment.  Many were still skeptical some told me it was not worth the cjange in payments (almost $170 a month) anda few others thought I would be shocked by the fees (no fee, no credit scheck, no points no anything)

 

 

Well today I was able to check the EQ and TU reports from this site and they reflect the new data.    MY scores are unchangfed.  In both cases the only thing that seems to report is the new payment.  Nothing else.   Admitedly I do not see as much as a potential creditor might see but there is certainly no reason to believe that NFCU reported this any differently than they said they would.

 

 

So if you are offered the same thing  ask plenty of questions and check your scores and reports before an afterwards  but if my case is any example it is quite possible that they will do exactly as they said and it will not affect you negatively---although the $170 a month is a nice positive effect.

 

if you havc questions or comments this is the place for them  but I am pleased with the results.

 

 

 

Moderator Emeritus
Posts: 5,279
Registered: ‎03-18-2008
0

Re: How A Mortgagfe Modification (non HAMP or HASP) is reported anad Scored

That's great news.  You are fortunate, because a few years ago the Consumer Data Industry Association established reporting guidelines for modified loans that clearly had a negative impact on the credit scores of some persons who had received modifications.  However, these guidelines are inconsistently applied, which has benefited you.

 

Interestingly, as of a couple years ago the HAMP modifications were not expected to have a negative impact on credit scores, because they were assigned a new comment code that was distinct from that used for non-HAMP modifications.  Since there was no statistical information about the forward-going credit history of persons with HAMP modifications, the comment code could not be incorporated into the FICO scoring model.  I'm not sure if this has changed since then.

 

 

Regular Contributor
Posts: 183
Registered: ‎07-21-2007
0

Re: How A Mortgagfe Modification (non HAMP or HASP) is reported anad Scored

Remember though NFCU did not report ANYTHING except the new payment.  theu did not specifically say that a smodification occirred.    Or at least that is what they said and nothing in the record disproves that.  that is why i was willing to do this----that and the monthly savings.

Regular Contributor
Posts: 183
Registered: ‎07-21-2007
0

Re: How A Mortgagfe Modification (non HAMP or HASP) is reported anad Scored

[ Edited ]

I am a bit amazed if HAMP and HASP modifications did not result in anything negative.  Everything I have reead says they did----and since you have to be behinf in payments to participate in those programs it does not make sense that they did not carry with them a penalty.

 

Here is onew article tht says participants were hurt ---and insists that most of them had their accounts mnarked with an existing code not a new one.

 

http://bucks.blogs.nytimes.com/2010/01/05/how-loan-modifications-impact-credit-scores/

Moderator Emeritus
Posts: 5,279
Registered: ‎03-18-2008
0

Re: How A Mortgagfe Modification (non HAMP or HASP) is reported anad Scored


geronimo2008 wrote:

I am a bit amazed if HAMP and HASP modifications did not result in anything negative.  Everything I have reead says they did----and since you have to be behinf in payments to participate in those programs it does not make sense that they did not carry with them a penalty.

 

Here is onew article tht says participants were hurt ---and insists that most of them had their accounts mnarked with an existing code not a new one.

 

http://bucks.blogs.nytimes.com/2010/01/05/how-loan-modifications-impact-credit-scores/


This is an example of how the comment codes and reporting guidelines are inconsistently applied.  In theory, if HAMP participants are reported using the CN code, then at the time the article was written, it wouldn't have had any impact on credit scores.  The AC code, however, has a clear negative effect - the wording associated with AC is something like "paying as part of a modfied or reduced payment plan".

 

Eligibility for HAMP, according to the original guidelines set forth by the government, did not require borrowers to be behind in their payments in order to qualify.  However, individual lenders would establish their own guidelines as to whom they would consider for modification.  I've heard that in some cases, a borrower wouldn't get any attention unless they were actually behind.  But technically speaking, you do not have to be delinquent to qualify for HAMP.

Regular Contributor
Posts: 183
Registered: ‎07-21-2007
0

Re: How A Mortgagfe Modification (non HAMP or HASP) is reported anad Scored

Every site I see about HAmp  says something like this

 

https://www.hmpadmin.com/portal/programs/hamp.jsp

 

Technically you are correct.  One way to be eligible would be to be behind in payments.  the other way is to be in imminent danger of default.

Moderator Emeritus
Posts: 5,279
Registered: ‎03-18-2008
0

Re: How A Mortgagfe Modification (non HAMP or HASP) is reported anad Scored

Yep, that's what I have seen as well.  There are some lenders who have their own guideline overlays (kind of like the way some FHA lenders will use stricter criteria) that require a borrower to be late.  When the program first came out, there was a lot of confusion and negative effects that resulted from misunderstanding about the guidelines.  Some borrowers were told that they had to be late, so they intentionally let their payments lapse.  They applied for HAMP, got denied, and were left with no modification and a lower credit score.

 

The wording of the guidelines you have referenced have definitely been tightened from they way they were a couple years ago.  Back then, I don't believe there was an "imminent default" clause.  It was technically open to any borrower - delinquent, distressed, or not - who had no other options to refinance, either because of a loss in home value or a worsened DTI.

Regular Contributor
Posts: 183
Registered: ‎07-21-2007
0

Re: How A Mortgagfe Modification (non HAMP or HASP) is reported anad Scored

The original guidelines from 2009

 

Again slightly more lenient but they still indicate a financial problem

 

Which mortgages are eligible for HAMP?

To qualify for the HAMP, mortgages must meet the following requirements:

  • The mortgage must be a first mortgage encumbering a 1-4 unit residential property that serves as the borrower's current primary residence. 
  • The borrower must have had a change in circumstances that causes financial hardship, or be facing a recent or imminent increase in the amount of the borrower's monthly payment that is likely to create a financial hardship.
  • The unpaid principal balance of the mortgage must be no more than $729,750 (this
    amount increases proportionately for multiple unit properties.)
  • The mortgage can not have been previously modified under the HAMP.
  • The mortgage must have been originated on or before January 1, 2009 (mortgages
    are eligible to be modified until December 31, 2012)


Regular Contributor
Posts: 183
Registered: ‎07-21-2007
0

Re: How A Mortgage Modification (non HAMP or HASP) is reported an\d Scored

I know this thread got sidetracked intoa discussion about the impact of other types of mortgage modifications.  It's original intent was to discuss the outcome of a mod I accepted in spite of advice from some on the forum that it might be viewed as one of the other types of mods.

 

In any event in at least this case the modification does not seem to have adversely affected me.   The same question was brought up in another tread and I just wanted others to know that it is not necessarily bad----though I agree with the counsel given to me here to aska lot of questions first.

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
† Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.