How a loan modification can damage your credit
An article released in The New York Times on Jan. 1 reports that economists and housing
industry experts believe that President Obama’s plan to fight the foreclosure crisis is
not working. In fact, many believe that the
President’s $75 billion plan, which compels banks to lower monthly mortgage payments, has
backfired and prolonged the recovery process.
The article mentions briefly an important and little-known consequence
of the program: the fact that some borrowers who accept a loan modification receive
adverse reporting on their credit reports.
Certain banks, such as Bank of America, have reported to credit rating
agencies that homeowners are making only partial payments. This occurred despite some borrowers being
told by their mortgage companies that their credit would not be damaged.
In short, a loan modification seems like a great alternative
to foreclosure, but one should consider it with caution, for there is no such
thing as a free lunch (especially if a banker is treating). If you are
considering a loan modification, be sure to understand how it will affect your
credit report and long-term financial goals.
Greetings! I’m Kevin D. Johnson, a business owner who has recently assumed the role of consumer advocate and internet activist. Atlanta, Georgia is my home.
Upon returning from my wonderful honeymoon in Jamaica in October 2008, I received what I thought was an ordinary American Express bill, but to my surprise it was a disappointing letter informing me that my credit line was reduced by about 65% for a highly suspicious and discriminatory reason. Considering my excellent credit score and pristine payment history, it just didn’t make sense. However, what does make sense are the unfair and insidious policies that I have uncovered when asking why. It is time to change them.
I created this web site to document and share my challenging journey to change what is wrong, unfair, and unjust in the credit card industry. The ultimate goal of this web site is to inform consumers of ways to stand up for themselves against treacherous business practices and to educate consumers about how to improve their credit. Finally, I hope to encourage a more open dialogue with credit card companies about their policies–good and bad.
I am proud to say that this blog's unyielding demand for change led to an important 
See to it that you're also agreeing with the compliance. This avoids credit blunders.
Posted by: loan modification lawyer | December 07, 2011 at 02:40 AM
There’s so much misinformation out there that people don’t really know what is and is not. It’s refreshing to see people that know what they’re talking about. You have an Informed commentary seems to be a rare commodity these days. Keep it coming Loan Modification
Posted by: Loan Modification | February 11, 2010 at 08:57 AM
Question - I just contacted my credit card companies as they tell you to do on the talk shows. Two of them agreed to put me on a fixed payment plan, lowering my interest to 6%. I'm wondering how this will affect my credit rating for the future? I don't plan on any major purchases for probably another 5 years at which point I will probably need a newer car. But I'll also have a lot more income at that point as my pension will kick in. Also, by getting them to lower the interest rate, I will be able to pay everything off by March, 2011.
Can anyone shed some light on this?
Thanks,
Carole
Posted by: Carole May | January 19, 2010 at 05:46 PM
There’s so much misinformation out there that people don’t really know what is and is not. It’s refreshing to see people that know what they’re talking about. You have an Informed commentary seems to be a rare commodity these days. Keep it coming Loan Modification
Posted by: Loan Modification | January 08, 2010 at 02:03 AM
Kevin, glad to see you back. Quick question: if a bank reports partial payments, about how much does that make your credit score go down?
Posted by: Rick Marlow | January 04, 2010 at 07:25 PM