Does Mortgage Aid Hurt Your Credit Score?
Mar/08/2010 02:54 PM Filed in: HomeownerResource Guide
Homeowners seeking mortgage help through loan modification programs such as HAMP and HAFA, may face another issue—lower credit scores.
Loan Modification and Credit Scores
Homeowners on the verge of default have several loan modification programs now available to them, thanks to the federal government’s mortgage bailout plan. These programs are designed to help homeowners in distress stay in their homes by restructuring or refinancing their mortgages. As of February 2010, there were over one million homeowners in the U.S. seeking assistance through a loan modification program. But many are finding this silver lining has a dark side as well: lower credit scores.
Homeowners who are still making their payments on time but are on the brink of default and possibly foreclosure can take advantage of the Making Home Affordable program. The program offers several options to distressed homeowners, including refinancing and modifying mortgage loans. Qualified homeowners enter these programs on a trial basis, with the requirement to make at least three payments.
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