How To Dig Yourself Out of a Mortgage Mess

Posted on November 7, 2009
Filed Under Finance, Foreclosure, Loans, Mortgages | Leave a Comment

Loans modifications have consequences that most homeowners seeking help to save their home from foreclosure have no clue about. This article tells you not only what they could be, but also answers questions on how to minimize or avoid them altogether.

In the middle of struggling to save their homes, homeowners could inadvertantly ruin their credit scores.

Starting this year, the Obama administration started pushing so-called loan modifications as a way to keep millions of Americans in their homes as real-estate values plunged and unemployment soared.

Under HAMP, the government’s Home Affordable Modification Program, the lender agrees to adjust the terms of the loan. In most cases this is done by temporarily lowering the interest rate or extending the period in which the loan must be repaid.

Mortgage companies also have their own programs for borrowers who don’t qualify for the government program.

However, lenders sometimes report the modifications to credit bureaus in ways that can hurt a good credit history. Consumers looking to dig themselves out of a mortgage mess can take steps to minimize the serious credit consequences of loan modifications and even short sales.

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Source: The Wall Street Journal

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