Welcome, Guest. Please Login or Register
Clusterheadaches.com
 
Search box updated Dec 3, 2011... Search ch.com with Google!
  HomeHelpSearchLoginRegisterEvent CalendarBirthday List  
 





Page Index Toggle Pages: 1
Send Topic Print
Credit Scores Can Drop (Read 1739 times)
KingOfPain
CH.com Hall of Famer
*****
Offline


Disgusted!


Posts: 1935
North America
Gender: male
Credit Scores Can Drop
Mar 20th, 2010 at 6:42am
 
Credit scores can drop after getting loan help
Homeowners see credit scores sink after signing up for mortgage relief


WASHINGTON (AP) -- Some homeowners who sign up for the government's mortgage assistance program are getting a nasty surprise: Lower credit scores.

For borrowers who are making their payments on time but are on the verge of default, the Obama administration's loan modification program can reduce their credit score as much as 100 points. That makes it harder to get a loan and can present a problem when applying for a new job.

Housing counselors say it's unfair, especially because the news often comes as a surprise to homeowners.

"Why should people's credit be hurt even worse when they're trying to do the right thing?" said Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group in New York.

And many homeowners are angry that a program designed to help carries such a penalty, said Kathy Conley, a housing counselor with GreenPath Inc., a nonprofit group in Farmington Hills, Mich.

"It's a feeling of being duped," she said.

To enroll in the Obama administration's $75 billion "Making Home Affordable" program, borrowers enter a trial period in which they make at least three payments. But some are finding out that their credit score takes a dive during this trial phase. It happens once their mortgage company notifies the three big credit bureaus -- Experian, Equifax and TransUnion.

The Obama administration acknowledges that enrolling in the program can hurt credit scores.

The credit score issue is an unexpected consequence of the program that has been plagued with problems and disappointing results since its launch last year. Only about 170,000 homeowners had completed the process as of February. Hundreds of thousands more are still in limbo.

Multimedia File Viewing and Clickable Links are available for Registered Members only!!  You need to Login or Register
Back to top
  

Arrived August, 1999.
We swallow greedily any lie that flatters us, but we sip only little by little at a truth we find bitter. - Denis Diderot
Thanks for the ignore function! Wink
 
IP Logged
 
Grinner62
CH.com Veteran
***
Offline




Posts: 131
Wichita Falls,Texas
Gender: male
Re: Credit Scores Can Drop
Reply #1 - Mar 20th, 2010 at 8:37am
 
KingOfPain wrote on Mar 20th, 2010 at 6:42am:
"It's a feeling of being duped," she said.

I can't HOPE to pay you unless I can get the gub'ment to force you to CHANGE our contract. How dare you impose the TRUTH of consequences.

Back to top
  
 
IP Logged
 
monty
CH.com Hall of Famer
*****
Offline




Posts: 1056
The Swamp, Florida
Re: Credit Scores Can Drop
Reply #2 - Mar 20th, 2010 at 8:51am
 
If people are paying their bills on time, but are 'on the verge of default' ... maybe their credit score should be lowered?? 

The credit score is not all about personal responsibility (although personal responsibility is one factor that will affect it). The credit score also measures certain things about your economic position.

Millions of people had their credit limits reduced due to external factors (the 'credit crunch'), and this reduced their credit scores significantly even if they kept paying every single bill on time. The person didn't change - the bank's ability to make loans did! But no man is an island, and no credit score is based purely on the responsibility of the individual.

The credit score penalizes people who are responsible enough to pay off their debts entirely and close down their revolving charge accounts. Suddenly, they have less available credit (Ding!), and part of their credit history has been shortened. (Ding!) 

Should employers use credit scores to help make decisions related to hiring, firing, or promotions? Should your auto insurance rates be dependent on your credit score as well as your accident history? Those are separate questions, but they are worth asking.

Back to top
« Last Edit: Mar 20th, 2010 at 8:59am by monty »  

The outer boundary of what we currently believe is feasible is far short of what we actually must do.
 
IP Logged
 
Brew
CH.com Sponsor
CH.com Alumnus
***
Offline




Posts: 14163
Re: Credit Scores Can Drop
Reply #3 - Mar 20th, 2010 at 8:56am
 
The Man will keep tabs on the plebs any way that is advantageous for the Man.

Once us plebs accept this, life becomes much less complicated.
Back to top
  

"I have been asked if I have changed in these past 25 years. No, I am the same. Only more so."  --Ayn Rand
 
IP Logged
 
Sandy_C
CH.com Sponsor
***
Offline


There is no such thing
as a stupid question.


Posts: 3371
Jamestown, NC
Gender: female
Re: Credit Scores Can Drop
Reply #4 - Mar 20th, 2010 at 4:52pm
 
My husband and I have four credit cards, all of which are paid in full each and every month.  One for my business, one for his business and two with low credit limits for general household/gas/etc stuff.

We have no car payments, no store credit cards, no debts other than the mortgage on our personal home and on a rental property we own - both of which are paid every month (actually we're two months ahead in payments).

Our mortgage lender on the rental offered a refinance on the mortgage.  I said, OK, make me an offer.  They ran my credit report, and my FICO was very high thankfully.

But.... because the credit limits on those four cards was pretty high ($50,000, $30,000, $5,000, $5,000), even though I pay off all charges immediately, the reporting agencies lowered my score because of what I "could" charge.

So, in my personal opinion, it doesn't make a hills beans of difference whether you pay all bills in full every month or you make the minimum payments every month.  What you "could" charge makes all the difference in your score.

Sandy

Back to top
« Last Edit: Mar 20th, 2010 at 4:54pm by Sandy_C »  

Lean on me, when you're not strong, cause we all need somebody to lean on.
 
IP Logged
 
Bob P
CH.com Hall of Famer
*****
Offline


Shut up Bob!


Posts: 4573
Clio,California
Gender: male
Re: Credit Scores Can Drop
Reply #5 - Mar 21st, 2010 at 7:22am
 
Quote:
said Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group in New York.
That wouldn't be ACORN, would it?
Back to top
  

Mrs. Barlow, I never, and I repeat never, ever pissed in your steam iron.  "SHUT UP HUB!"
WWW  
IP Logged
 
Grinner62
CH.com Veteran
***
Offline




Posts: 131
Wichita Falls,Texas
Gender: male
Re: Credit Scores Can Drop
Reply #6 - Mar 21st, 2010 at 7:43am
 
Bob P wrote on Mar 21st, 2010 at 7:22am:
That wouldn't be ACORN, would it?

Grin Cheesy Grin Cheesy Grin Cheesy Grin Cheesy
Back to top
  
 
IP Logged
 
Marc
Ex Member
****




Gender: male
Re: Credit Scores Can Drop
Reply #7 - Mar 21st, 2010 at 3:02pm
 
I'm becoming a fan of Dave Ramsey's approach to working toward achieving a "zero" credit score.

One of my daughters and her soon to be husband had heavy debts in student loans, credit cards and car loans. When they saw what they were paying in monthly interest, they took one of Ramsey's seminars.

Three years later, they are debt free, have no credit cards, no car payment and buy everything cash.

They both have decent, but not high dollar jobs so it was quite a painful process - but now they live almost worry free with cash in the bank.  They discovered that getting a mortgage actually wasn't hard at all with a zero credit score as long as they had a solid down payment and no debts.

I realize that it sounds totally counter intuitive because we've all been taught to pray at the alter of credit. I'm watching it work fantastically for them.

With the sole exception of a small home mortgage, they have one basic rule: If we don't have the money, we don't buy it. They save up until they can actually afford it.

Marc
Back to top
  
 
IP Logged
 
Cathi_Pierce
CH.com Alumnus
***
Offline


I love YaBB 1G - SP1!


Posts: 1191
x0|Oregon City|USA||0|0|OR,Oregon
Gender: female
Re: Credit Scores Can Drop
Reply #8 - Mar 21st, 2010 at 3:33pm
 
This loan modification stuff is the meat of my business of late.. I should charge a commish on modification assistance. At least here in Oregon, prices are still depressed, and, frankly, people are scared of purchasing, since jobs are scarce, and businesses are still folding.
To that end, I am pretty knowledgeable, and, as Batch said above, things are being 'made up as they go along" here.
IF you qualify for a loan mod....after 6+ months of providing duplicate and triplicate proof of employment, impassioned letter of explanation as to HOW you no longer qualify for the loan you received. after you've been turned down for a traditional refinance(generally because your appraised value is 20% lower than it was 2 yrs ago.....after jumping thru HOOP after HOOP.....you finally get a letter that states,,,,,to the effect: Congrats, your financial life sucks enough that Uncle Barack is gonna help you out.....send EXACTLY X  number of dollars, in certified funds, on EXACTLY the first of the month, for 3 months, and, after that trial period, we will make this agreement permanent and will supercede the terms of your original mortgage..........at that point, your loan servicer-who might have been the facilitator for your loan mod as well-has the OPTION of reporting your reduced payments as 1-pays on time, no change 2- late for 1-2,3 payments, putting you at the HOT stage of default, as some have been known to do, (one hand not aware of what the other hand is doing) reject the trial payments, since they do not cover the p&i, throwing you immediately into a deficit situation, and BANG, foreclosure........
Obviously, the first option is the best, but depends on how your servicer handles it.
Approx 1/3 of the lenders I have worked with understand the ramifications and are willing to waive reports for this 3 month trial, AS LONG AS  no payments are late currently.....in other words, you must continue to make the full monthly payment while the lender is building your file, developing a plan and losing your paperwork..in order to keep your credit scores intact.
It's not an easy road, and each file is handled differently....and the short reply, Steve is YES, scores can go down..... but not nearly as much as a short sale or foreclosure would ding you.

Personally, I think, for people who genuinely need it, the loan mod program is an excellent one. IF your scores are good, and you RIGHTEOUSY have fallen victim to this new "weaconomy", you can see your payments dropping considerably-to as low as 2.3% interest.......keeping you IN your home, giving you time to recoup, and, perhaps, regain some equity position, so you can get out, in time.
Rules change by state, vand as noted above, by lenders as well.....this is not an easy project for laypeople to undertake. ASK FOR PROFESSIONAL HELP...and, if a Realtor is here to help you, know they will make not a single penny on the deeal........BUT
Loan Mod CAN work.

Hoping NOONE here needs that kind of help!
Cathi
Back to top
  

Life is not measured by the number of breaths we take, but by the moments that take our breath away.
 
IP Logged
 
Cathi_Pierce
CH.com Alumnus
***
Offline


I love YaBB 1G - SP1!


Posts: 1191
x0|Oregon City|USA||0|0|OR,Oregon
Gender: female
Re: Credit Scores Can Drop
Reply #9 - Mar 21st, 2010 at 3:40pm
 
Marc's right....when I was first married, credit card interest was tax-deductible....... people carried HEAVY debt because of that. NowADAYS IT JUST DOESN'T PAY TO USE CREDIT.
The days of bigger, better, faster are gone, being replaced by, security, cushion and spartan living....its FAR better to choose this rather than be forced into it.
WATCH your spending, KNOW where you money is going and keep an eagle eye on your scores....live WITHIN your means.
If you want to read a great book, read The Millionaire Next Door...
nuff said, sorry bout the preaching........

Cathi Cheesy
Back to top
  

Life is not measured by the number of breaths we take, but by the moments that take our breath away.
 
IP Logged
 
Charlie
CH.com Alumnus
***
Offline


Happy to be here


Posts: 18971
Jamestown, NY
Gender: male
Re: Credit Scores Can Drop
Reply #10 - Mar 21st, 2010 at 4:04pm
 
Don't worry though. Consumerism never stays down for the count.

Things will be back to "normal" soon enough. How lucky can we be?

Charlie
Back to top
  

There is nothing more satisfying than being shot at without result---Winston Churchill
135447360 mondocharlie mondocharlie  
IP Logged
 
Marc
Ex Member
****




Gender: male
Re: Credit Scores Can Drop
Reply #11 - Mar 21st, 2010 at 4:53pm
 
Charlie wrote on Mar 21st, 2010 at 4:04pm:
Don't worry though. Consumerism never stays down for the count.

Things will be back to "normal" soon enough. How lucky can we be?

Charlie


I hope you are wrong Charlie. Not saying you are, just hoping.

I'm seeing evidence of a shift in core thinking on this subject and I can only hope that it continues in a healthier direction.

When you read what Cathi wrote above and spend a moment to think about the the whom/how/why and the ramifications of it....it's really quite scary.

Marc
Back to top
  
 
IP Logged
 
Page Index Toggle Pages: 1
Send Topic Print

DISCLAIMER: All information contained on this web site is for informational purposes only.  It is in no way intended to be used as a replacement for professional medical treatment.   clusterheadaches.com makes no claims as to the scientific/clinical validity of the information on this site OR to that of the information linked to from this site.  All information taken from the internet should be discussed with a medical professional!