Looks like your credit score will get trashed even if you're current with the Obama plan

[AACPA]

Found this interesting article Cheaper Mortgages Spark Lower FICO Scores for Payers (Update1) - Bloomberg.com Looks as though even if you are current going into the trial period on the Obama plan your credit will still get trashed. After reading this I'm a little less concerned about the newly minted 30 day late (soon to be 60 day late) that Chase just put on my credit report. I guess in the long run your credit will get trashed one way or another if you accept the loan mod. through this program, at least according to this article anyway.

[briknope]

Not to be a poo poo...but Chase wouldn't even do anything unless I "became late" which is what I had to do to get the trial mod I have in the 1st place. I figured as much that there would be some pain in doing this modification thing (taking a credit hit) I keep hearing also "Obama Plan" now does anybody here think the "Obama Plan" really matters to the banks? How much do they (banks) get for following the guidelines of this Obama Plan? If I got it right its a few thousand dollars. Some are looking at a 50k-400k deficiency on their mortgage (upside down, under water, etc..) I have been lurking here on this website for quite some time now watching the results of others who are going through the same thing as I. Wonder if the "trial plan" will really pan out? My contract was VERY open ended. So, who knows? Am I throwing good money away that would come very handy if my family has to move? Hope not, but reading here every day it looks less and less likely. And as far as credit scores, yea I had a dream once of keeping mine up in the 700's at least, but then reality hit and now I know I'm not getting out of this mess without any battle scars.

[Chased around and around]

briknope, I know this may sound strange, but as I see it excellent credit got us into this mess. The better your FICO the more you are tempted to get into trouble.

Maybe all of the US needs to have bad credit so that we learn to live under our means, and only purchase what we can afford at that time with cash. Right now we have 15 trillion in unsecured debt in our country.

Would we all not be a better position to buy with cash and actually have money in the bank. Or have excellent credit, debt to the hilt, living paycheck to paycheck. Some how we all got this idea we buy what we want and not what we need...

[babbles]

Yeah there's a deficit in this country but we can afford to give over-priced athlethes millions of dollars each to run up and down a basketball court. Don't understand that!

[Jillian118]

Im curious to know what would happen if you were accepted for a trial modification amount pending a permanent mod & you just continued to make your current monthly payment. The rep told me (if and when they ever get around to me) that it would show up on my credit and once the permanent mod was in place it would be fixed. I dont really belive this. My account with them is current, but if I was able to make my current payment for the next three months while on the trial mod...I would have met their obligation right? Or would they still ding your b/c you are on a "trial modification" even though you are still making the same monthly amount? How could they possibly ding your credit at that point?

[AACPA]

My understanding is that accepting the loan mod from the HMAP will affect your credit whether you are current going into it or not and that accepting the loan mod could see your credit score drop 100 points or more. Its not just the trial modification that is going to ding your credit, it is accepting the final modification that is going to ding your credit. The fact that you had to apply for a loan modification shows you are a now a greater credit risk.

[Hodgini66]

Originally Posted by Chased around and around

Maybe all of the US needs to have bad credit so that we learn to live under our means, and only purchase what we can afford at that time with cash.

Right now we have 15 trillion in unsecured debt in our country.

Would we all not be a better position to buy with cash and actually have money in the bank. Or have excellent credit, debt to the hilt, living paycheck to paycheck. Some how we all got this idea we buy what we want and not what we need...

Well said.

I'll add, wait for the next 2 or 3 more quarters when even worse financial news on all the (now) 30% credit cards and Alt-A mortgages start defaulting.

Alt-A's are in the area somwhere between prime and sub-prime BUT most notably, they are usually JUMBO's like mine (980k first + $280k 2nd). Many of these Alt-A Jumbos are now starting to see rate resets. One of these houses goes under is equal to 3 or 4 median houses (mortgages) going under.

Gee, I sure was STUPID listening to my (now) ex-wife when I bought an $800k home back in 2002. It's worth less today than back then.

Credit Ratings + Higher Ability to Borrow = BIGGER OPPORTUNITIES FOR STUPIDITY!

[shade]

Originally Posted by AACPA

My understanding is that accepting the loan mod from the HMAP will affect your credit whether you are current going into it or not and that accepting the loan mod could see your credit score drop 100 points or more. Its not just the trial modification that is going to ding your credit, it is accepting the final modification that is going to ding your credit. The fact that you had to apply for a loan modification shows you are a now a greater credit risk.

This should absolutely not be the case. When your modification is finished and your new payment is X as long as you make the new payment no adverse affect will be placed.

[AACPA]

Not according to the article. Guess we'll have to take a wait and see approach once people start getting mods finalized.

[shade]

Interesting article. They should not be messing up credit unless people are late in paying. Modified payment doesnt necessarily equal more risk.
Bastards.