Q: After multiple requests to our mortgage company, our big box lender finally agreed that my husband and I may qualify for the federal government’s Making Home Affordable Loan Modification Program. They mailed us an application.
In reading through the information, I’m very worried about the “Trial Period Plan”, where we are required to make payments while modified loan terms are being finalized. It’s not specified how long this trial period may be, and the application further states “During the trial period, we will report your loan as delinquent to the credit reporting agencies even if you make your trial period payments on time. However, after your loan is modified, we will only report the loan as delinquent if the modified payment is not received in a timely manner.”
This is very concerning to me, as even though we have had a few payments late greater than 30 days, we’ve been trying very hard to make our mortgage payments on time every month so our credit rating isn’t affected as much.
I’d like your opinion on whether you think this is a good program and your advice on whether we should go ahead with the application.
A: All loan modifications under the Obama Making Home Affordable Loan Modification plan are done on a trial basis. The trial tends to last 3 months, but the loan modifications under President Obama’s Making Home Affordable program cannot be made permanent until you have made at least 3 modified payments in full and on time. At that point, the trial modification under the plan can be made permanent.
I am disturbed that your lender says it will report your loan as “delinquent even if you make the trial period payments on time.” Many lenders are reporting homeowners in loan modification program as paying on time or “paid as agreed,” which is what you want to improve your credit history and credit score.
But I have heard from several readers that different lenders are placing the loan payments in an escrow type account but are showing those borrowers as delinquent on their payments. When they report these payments late or delinquent, those borrowers credit history will suffer and their credit scores will go way down. Later when the loan modification is approved, they start showing the loans as paid on time.
If the lender is going to show you as delinquent during the initial states of the Obama Making Home Affordable plan process, it seems grotesquely unfair. You should contact the folks who are running the Making Home Affordable department at the Treasury and don’t forget to send an email to your representatives in Congress and to the White House. The Making Home Affordable Plan was intended to help homeowners get back on their feet and give them a chance.
However, if when you applied for the loan modification under the Making Home Affordable plan and you were already late or delinquent in your payments, the lender can continue to report your account as delinquent. But if you have come to the lender current on your payments, the lender should not then report you as delinquent when they process you through the plan.
But if lenders are reporting their borrowers as delinquent during the process that the Obama administration has promoted, their actions seem counterproductive and will hurt those borrower’s credit history and credit scores.
If the lender is going to report borrowers as delinquent on their loans during the loan modification application process even though they are following the direction of the lender in working through the loan modification process, they seem to be giving an incentive to borrowers to stop paying altogether and wait for the lender to respond to the Making Home Affordable Plan loan modification application and then resume payments.
(Not to be cynical, but you have to really wonder if the increased payments made to lenders for delinquent borrowers over on-time borrowers comes into play. It really seems as though the Obama Administration is sending the wrong message.)
You should certainly go ahead with the application if you believe you are getting a good deal and you know that you will get a good deal but know that if you make payments that are less than what is owed on your loan, your credit history and credit score will be severely hurt.
I don’t think the Making Home Affordable Plan contemplated having lenders ding their borrowers during the loan modification process. At least, I hope not.
Congress and the White House, are you listening?
For more information on the Obama Making Home Affordable Loan Modification Plan read the following articles:
Refinancing Mortgages Under Obama’s Making Home Affordable Plan
Refinancing Mortgages With Falling Home Values and The Obama Making Home Affordable Plan
I have been on the loan modification program since Sept. 2009 I made my three trial payments on time and I have called every month to check on the status and I was given the same story every time I called. It is still under review and no decision has been made and to continue making my modified payments. I have never been late on any mortage payment prior to the modification or while on the modification but I was just told verbally this week when I called in that the
modification was declined. After waiting 9 months I am declined!!!! I pulled my credit report last night it shows me 90-120 days delinquent on my mortage. My perfect credit that I worked so hard to keep is now reuined. This program was suppose to help those struggling to make there mortage payments even if you have never been late. I was told this would not affect my credit and now it is reuined. It makes you just want to throw your hands up and give up.
Barb; Which bank is this?
We started LM with Citimortgage about 1 year ago. We have submitted full document they requested 4 times, made many many calls, but still no any progress. We want quit to have a normal refinance, but no bank will take our case since our poor credit scores ruined by the current lender.
LM was supposed to help peoples to go through this difficult time, but it turns out it push us to the corner, having no other choice but staying in current high rate and additional emotionally suffering from this LM. We can accept any decision on my LM request, but damaged credit scores have to be fixed since we haven’t done anything wrong.
How can we find a good lawyer to help us?
Until the credit score can be divorced from credit reporting the economy cannot change. When collection agency fraud is happening on loans which appear and have long been paid as agreed but still appear from 10+ years ago, the eyes that see my defaukted mortgage, and paid off cards which is the newest thing in credit score /report risks , since a publically traded company who was legit has become a huge rogue and 6 states Attorney generals are investigating, and the identity theft risk, which no one has any power to completely protect me from., is also subject to 200 point reduction due to an unlawful foreclosure by a bank who had not legal right to do anything since there was not any reorded legal change reflecting them as the new owner of the loan, which is now making anyone who they foreclosed on discriminated against further because none of us can do anything to prevent it or protect us. So what is gonna raise my number.. or perhaps repay the 19.9% I got for a car loan that was zero percent to someone who didnt get foreclosed on, now that there is quite a lot more in question than a name change when Wamu was the lender. Wamu violated their fuduciary responsibility to the borrowers by offering incentives to non wamu employees to write terms that were harmful and intentionally mislead the people they by law should have protected. I think my civil rights are being violated by the entire system, because it is clear and simple discrimination. Just like any other form, one set of rules for this group and one set for another which is horrible. I feel its the same as saying the low score the bank caused is now their excuse for keeping their money and forcing a cash payment. So the bank gets the house, they get to write off losses, they can get PMI even, and then not fix homes so that traditional funding wont apply and then they get a cash only sale.
Instead of punishing me a victim and rewarding a law breaking bank who now has a property they took unlawfully.
The simplest way to get the economy fixed, and i mean outside of correcting the great wrong doing of the foreclosures is to treat mortgages like child support. a garnished payment every month for houses that payments for loans would be 1/3 of rents, and would be deducted automatically before the pay gets to the bank, if they are so worried about risk of lending to someone who has a history of default and a score which will never be raised enough to not get ripped offf for the rest of my life.. but if they were forced to write mortages on their own foreclosed REO sales, then I would have money enough to go buy something and make my house a home.and try to rebuild what is left after being wrongfully foreclosed to begin with, and further if a law is in place and not enforced when criminal acts like changing numbers on a filed mortgage which did happen to me and the act itself involved a laon broker, lender, and notary which all conspired and subsequently falsified documents , Its a case of conspiracy to commit fraud, and yet I was told I had to take it to civil court. Excuse me , but when did my name change to the State of California and why is it my job to enforce the laws. When i reported the change and false notary docs in 2005 when it happened and again when the AG started the task force, the same answer. Until I am offered 100% safety from fraud and theft, then using a score based approval system is unfair and in my opinion a violation of my basic right to pursue happiness. I would be happy to not have to be evicted for the 4th tiime in 3 years since the foreclosure of the house i bought when the number changing bank knew i had no money to sue and the wamu terms were some of the worst. I would like the freedom to not be discriminated for the rest of my life for something done to me that was unfair unlawful and underhanded. The inablity to even protect myself from companies who now see a war zone and then attempt to claim they are owed money by me for laons i paid off 12 years ago and get harrassed 30 times a day with phone calls. SO if there was a class action against the entire credit reporting system for violating my rights, without my ability to prevent harm, then why has my family who has had men in every war since the revolutiionary war and help shape this country in to the land of the free?? I dont mind having rules but lets all have the same ones we have to obey. After the fact realization that there were obvuios unlawful judgements and proceedures my get some money back, but the items that were stolen from me by a slumlord, and my pets that were lost, or the relationship that didnt survive the foreclosure and 3 previous evictions because we paid a high rent ontime and the owners just pocket the money, No one is gonna replace anything i lost that meant as much as not being homeless in a few weeks when the bank approve the loan to but this house which I simply cannot survive a move, As it is I also have mental health issues and I owe no one except medical bills which were excessive to begin with and while I live with someone who makes a lot of money, but I myself no longer can, and it all started due to the fear and stress of losing my home. I have gone thru such indignities and personal trauma, things which wont appear as a loss in the foreclosure reversal of my home which has a new family living in it swimming in my pool and loving the beautiful things my money paid for, while expecting to refinance to better terms after 2 years of on time payments for bad terms which was the only way i could buy at all. I know I have run on here and apologize for it. Maybe some lawyer will see my point and stand up and make an arguement not just for me but for every person who has suffered from the ridiculous carelessness and nonenforced laws which have harmed me and will continue to harm me and the economy.
We are not alone. There are so many peoples suffered from this LM and fooled by these lenders. We have to do something to get this justified
what can we do?
Same as many of you above, BOA ruined my credit score from 810 to 623 becuase of the home affordable program. Now they declined my application because of missing documents. This is such a joke, before I got the decline letter, I called many times about the status and what the missing documents were, they always told me there were no missing documents! Now BOA declined my application, ruined my credit and life, it is so unfair!
Blah, blah, blah. Same thing happened to me as everyone else. It’s not like I don’t appreciate what BOA did for me, but they basically trashed my good credit … which I was trying to keep in good standing. And it’s not like they came out on the short end. I may be saving $900/month now, but they have a home that is worth $150k more than the mortgage and I now have a mortgage that went from 20 years remaining to a sweet 37 years.
Oh well, at least I’m still living and breathing and with 2% APR, I’m knocking $600 off my principal each month. So, while I’m not pleased that I now have rotten credit, if the housing market ever turns completely, I’m going to make some nice bank on my home!
After 6 months waiting for the bank to come up with a plan, and then 7 more months of a trial mod (which was supposed to last only 3), US Bank approved my mod. Stretched the loan out to 40 years, 2% first year, then 3%, then 4%, then 5%, then the going rate. For the first year my monthly payment is $400 less.
Unfortunately US Bank held my trial payments in a suspense account and reported my payments as partial. In my credit report summary it gets ranked the same as “delinquent”. When the mod was approved, they totalled all the money that was missing from each month’s payment for 7-month trial and ADDED it onto my remaining principal. Then USBank filed a claim with the PMI company for that same amount. They are trying to scam the PMI as well as me!
And USBank doesn’t have to follow any HAMP guidelines for credit reporting since they didn’t sign onto the HAMP plan. Their in-house mod is similar to HAMP, but without the govt restrictions that protect the homeowner.
I too am in the middle of dealing with US Bank for a HAMP loan mod. I work in the mortgage industry so I feel I should’ve known better than to ask for help from US Bank. I started this process in October 2011. It is now December 2012 and the HAMP loan mod is still not approved. I had my annual credit report pulled and they are showing me all kinds of late when I have not made a late payment. I was not late when I started this process, but I knew I was going to be having trouble making my payments. They told me that when I asked for help that I was considered delinquent at that time, even though my payments were made before a 30 day late. They also told me that if I paid my payment within the 30 days, then I woulnd’t be considered late on my credit report. My credit score is down over 100 points due to the way US Bank is reporting this. I just want this to stop and be done with it. My trial mod payments were complete as of September and the payment is only $100.00 less than my normal mortgage payment. I have copies of all checks that I paid them for proof. I have submitted a complaint to US Bank and I have disputed it on my credit report. I have been paying AS AGREED with US Bank and they need to report this in a way that will not hurt their customers credit. This is unfair to those who were not ever late on their loans.
We are going through the same thing. We applied for the Loan Mod with Bank of America back in Dec. 09 and nothing has been done. Numerous phone calls, faxes, ect. have been been made. Our credit is now ruined & we did nothing wrong—-BOA has been reporting that we have been late every month on our mortgage payment, when in fact we have not and we have all documents showing proof. We are seeking a lawyer starting next week.
I got a loan modification through US Bank via the HAMP program. It was a nightmare and took about 18 months. I got rejected a few times but just reapplied. Although the program did help me it really is a mess. Now I’m faced with really bad credit since they reported my payments as late during the modification. They told me a year ago that it would take 6 months to fix it through the credit bureaus. I’ve filed disputes with the credit bureaus and hopefully that will help but it does seem overall this program hurt more people than it helped.
it is painfull to me to read the comments of so many good people – like me – who held high [valued] credit standings which were ruined by this modification – while looking for a site to complain [after three years] at least i have found you [of different loaning institutions] all have been dealt the same bad deal – who listens to our voices.
i am NOW recently unemployed
car insurance has gone up due to this credit debacle
it is shameful to have nothing to stand for 22 years of hard work and paying all accounts timely to be labled ‘poor’ risk after all this time and a home devalued by thousands
my modification was less than $50.00 (such a joke) so I continued to pay my regular payment but then they could not report me delinquent either.
I modified my morthage with Chase (was EMC account). The whole thing went very smooth. My term is shorter, my balance is less and my payments lower. If you have a Chase mortgage check to see if they have a modification center near you and go talk with them.
Put a brain in the White House. Vote those that suppose to protect us, the consumers out while we still can.
We have been going through the same scenerio, we were not late on our mortgage payments, we wanted a lower interest rate, that was stated September of last year 2011. We were trying to get a car financed through Ford Credit, our credit showed we were 11 payments in delinquent. We have not been late, nor missed any payments in a year. This Home Modification Program smells of a scam. What can we do, we have called the Bank of America to get our credit update, but have not received any support. I advise no one to ever try Home Modification ever. It does not help, it henders all honest people, trying to improve their quality of life. We are so sorry we tried this program.
Fast forward 2 years and the same problems exist with the loan modification program. If you are considering it, please think about it. The program doesn’t function like it’s supposed to…helping people stay in their homes that are dealing with finanicial harships. I applied for a loan mod with Bank of America in March, 2012. In May, I started making my 3 trial payments with the understanding that BOA will report to the CRAs that I’m making partial payments under a loan modification according to the letter they sent me (although, from what I understand under HAMP guidelines, if a customer is current when they enter the trial period, the lender must report them as current to the CRAs). At the end of July, I started calling about my permanent modification and was told for 3 months that they are “behind in paperwork and trying to process my paperwork as soon as possible and to continue to make my trial payments”. At the end of October, I received my loan modification approval stating I was approved as of August 1, 2012. Great! Oh, no… at the beginning of December, I apply for a Wal-Mart credit card and I’m denied. I check my credit report and I’m shocked to see BOA reporting me to all 3 CRAs as 7 months delinquent (May-Nov) and making ZERO payments. There’s no mention of partial payments or paying under a modified plan anywhere on my credit report. I’m simply being reported as not paying my mortgage and I’ve made all trial payments and payments thereafter on time. I contacted BOA and I was told that this is how they report the loan modifications and it will be corrected after the loan mod is complete. Why even report it as deliquent in the first place?
This is very unfortunate that people facing financial hardships reach out for help only to be stripped of pretty much their last means of financial security…good credit. I had excellent credit going into the loan mod and felt it was pretty much my lifeline right now while I’m putting myself and daughter back on financial track after a divorce. I felt a little better knowing if something major happened, I could apply for a loan, credit card, etc…To find out that financial security is gone is devastating.
Fast forward 3 years. In 2010, I filed a Chapter 13 due to hardship (bad economy and laid off from work). I went through the Chapter 13 for 3 years and got a full discharge. In 2012 I applied for a modification with Wells Fargo Bank. It took a while but they finally sent me an approval letter stating I have 3 trial payments at the starting in Jan 2013. I paid all on time. They didn’t modify yet and advised that I should pay my trial payments until the modification in complete and that they are behind in approvals. I paid through Nov 2013 and the loan was modified under HAMP starting Dec 2013. I paid all through Dec 2014 until I sold my property. I intended to buy in early Jan 2015. I applied and was denied because the credit report stated I was late throughout 2013 on my payments to Wells Fargo. Well Fargo says that it is accurate. I am getting nowhere on this with them. I even tried my Bankruptcy Chapter 13 Trustee. They don’t even talk to anyone and my Bankruptcy Lawyer doesn’t know me anymore since they consider this a credit reporting problem. I disputed this with the credit agencies and they just call up the bank and the bank says its accurate. Don’t modify whatever you do. My credit is ruined for years to come and I have no recourse to anyone.
I’m going through the same thing. I made my two trial payments and have one to go, but Chase Bank is still reporting me as late every month to transunion.
I’ve tried to dispute this, but get nowhere.
When I tried to contact Chase, they transferred me to thier late payment dept, who transferred me to a supervisor who transferred me to something called “c cat” dept, who said they only handle internal complaints and they transferred me back to the late payment dept!!!
Does anyone know who can be contacted to help?
Fast forward 6 years … I am STILL getting spanked because of the two 120 days delinquent payments to Citibank Mortgage that were reported to my credit bureaus July and August 2010. I heard it takes 7 years to remove late payments on one’s bureaus. I guess I have just one more year to wait, but it’s the same story you all have written above. I have tried and tried to get them removed. Filed disputes with Citibank with the bureaus, etc. It’s the same ole story … I paid my trial payments timely yet I was reported delinquent. The Raping Of America Continues ….
Did a HAMP loan modification with US Bank, beginning in September, 2016. Followed all the instructions, made an extra payment on my Existing loan to make sure it was current prior to beginning the instructions for the HAMP loan, which included 4 months of modified payments, afterwhich the permanent loan payments would start. Did everything by the book as instructed and US Bank STILL SHOWS ME 5 PAYMENTS 30 DAYS LATE during that period of waiting for the final loan to complete, even while I was making the specified payments. I have called and written US Bank multiple times, have requested changes to my credit reports, only to Finally get a letter from US Bank saying there is NOTHING THEY COULD DO AND THAT MY CREDIT INFORMATION FROM THEM WOULD REMAIN UNCHANGED. That is b***sh**! Have lost points on my FICO because of these lates reported by US Bank. Even with all of my proof as to the payments NEVER being made late, it’s still on there. I will never EVER use US Bank again.