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Partial Payment Treatment under HAMP for Credit reporting

Discussion in 'Loan Modification' started by davephx, Nov 22, 2009.

  1. davephx

    davephx LoanSafe Member

    This issue has come up a lot.

    The credit treatment is very confusing

    Lenders were told by the Consumer Data Industry Association to report payments made through loan modifications from the Home Affordable Modification Program (HAMP) as a partial payment, which could hurt a person's credit score. For some credit scoring agencies, a partial payment can be as bad as a missed payment.

    Starting in November, lenders will be able to use a new code that specifies whether a mortgage was modified under the government's plan. But the credit reporting agenies have not decided how to handle the new code.

    Other reports say:
    Many servicers are reporting the modified mortgages to the credit bureaus as a “rolling 30-day late†while the modification is in its trial period. Homeowners are deemed “delinquent†during the trial period because the modified payment amount is less than the original mortgage payment amount, but the homeowner is not yet officially in the modification program. So, the credit reporting system interprets this as the homeowner’s making a partial mortgage payment each month. Consequently, a new 30-day late is reported each month during the trial period.

    How HAMP-Modified Loans SHOULD be Reported During the Trial Period

    Borrowers who are current on their mortgage when they enter into the trial modification period should NOT be reported as late, according to servicer guidelines for Fannie Mae, Freddie Mac, as well as other loans (â€non-GSE loansâ€) being modified by HAMP-participating servicers. Homeowners who were delinquent when they entered the modification trial period, however, will continue to be reported as delinquent during the trial period.

    Information to Forward to your Servicer if It’s Reporting Incorrectly

    If your loan is owned or guaranteed by Fannie Mae, see page 12 of Fannie Mae Servicing Guide Announcement 09-05R for information about credit reporting for HAMP-modified Fannie Mae loans. If your loan is owned or guaranteed by Freddie Mac, see page 5 of Freddie Mac Publication 800 for servicer instructions re: credit reporting of modified loans. If your loan is NOT owned or guaranteed by Fannie Mae or Freddie Mac (a "GSE loan"), see page 22 of “HAMP Servicer Supplemental Directive 09-01 for information about credit reporting guidelines for HAMP modified non-GSE loans.

    All three publications state that borrowers who are current when they enter into the trial period and make payments by the 30th day of each month, report as current, but on a modified payment
  2. johngor

    johngor LoanSafe Member

    Great info dave!
    I am with BoA and what it sounds like they just changed there policy on this as I ran into a CS that had a Q&A on her computer that states when you are on a trial payment plan we will report you deliquent during that trial period even if your trial payments are made on time.

    The sheet I had was diffrent. When you enter the trial period and you are deliquent we will continue to report you deliquent even if the trial payment is made on time.

    I know this is a huge concern for many of the folks out there!
  3. luvmyhorse

    luvmyhorse LoanSafe Member


    I went into my trial period currant. Aren't they supposed to continue to report me as currant?

    Since there is a difference between the new payment they are reporting me as partially delinquent.

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