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retailorig
Cherry Bomb


Joined: 05 Jan 2008
Posts: 132

Loan Mods and credit scores
PostPosted: Thu Sep 16, 2010 8:25 pm Reply with quoteBack to top

I have a client who got a loan mod recently. They made the request by themselves and got a decision in about 30 days. The loan was $600,000+, value $800,000. I don't recall the lender.

They got the loan switched to a 40 year term. The payments are fixed at 2% interest only for 5 years. They had never been late on a house payment. The lender has made no negative remarks on their credit report or even indicated that they did a modification.

I have another client in a similar situation who has requested a mod from Chase (formerly WAMU). This borrower has no equity in the home but has never missed or been late on a payment and has requested a fixed rate loan (no principal write down or reduction in payment) Chase states that if they grant a mod they will report to the credit bureaus as not paid as agreed.

Is this common with Chase? The borrower is trying to decide if it would be worth ruining his credit for a mod. Does anyone know if Chase will agree to a mod without the negative report to the credit bureaus?
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financepro
Flash in the pan


Joined: 22 Jul 2010
Posts: 36
Location: New York

Re: Loan Mods and credit scores
PostPosted: Thu Sep 16, 2010 8:46 pm Reply with quoteBack to top

retailorig wrote:
I have a client who got a loan mod recently. They made the request by themselves and got a decision in about 30 days. The loan was $600,000+, value $800,000. I don't recall the lender.

They got the loan switched to a 40 year term. The payments are fixed at 2% interest only for 5 years. They had never been late on a house payment. The lender has made no negative remarks on their credit report or even indicated that they did a modification.

I have another client in a similar situation who has requested a mod from Chase (formerly WAMU). This borrower has no equity in the home but has never missed or been late on a payment and has requested a fixed rate loan (no principal write down or reduction in payment) Chase states that if they grant a mod they will report to the credit bureaus as not paid as agreed.

Is this common with Chase? The borrower is trying to decide if it would be worth ruining his credit for a mod. Does anyone know if Chase will agree to a mod without the negative report to the credit bureaus?


I was under the impression that loan mods, by law, could not effect credit scores unless they were delinquent prior to the mod.
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kindandgentlejd
Dyn-o-mite!


Joined: 01 Jul 2008
Posts: 206
Location: Sacramento

Re: Loan Mods and credit scores
PostPosted: Sun Sep 19, 2010 3:13 pm Reply with quoteBack to top

financepro wrote:
retailorig wrote:
I have a client who got a loan mod recently. They made the request by themselves and got a decision in about 30 days. The loan was $600,000+, value $800,000. I don't recall the lender.

They got the loan switched to a 40 year term. The payments are fixed at 2% interest only for 5 years. They had never been late on a house payment. The lender has made no negative remarks on their credit report or even indicated that they did a modification.

I have another client in a similar situation who has requested a mod from Chase (formerly WAMU). This borrower has no equity in the home but has never missed or been late on a payment and has requested a fixed rate loan (no principal write down or reduction in payment) Chase states that if they grant a mod they will report to the credit bureaus as not paid as agreed.

Is this common with Chase? The borrower is trying to decide if it would be worth ruining his credit for a mod. Does anyone know if Chase will agree to a mod without the negative report to the credit bureaus?


I was under the impression that loan mods, by law, could not effect credit scores unless they were delinquent prior to the mod.


What law would that be? State or Federal? This is exactly why people who are underwater are better to just walk away. No matter what choice you make (other than still paying), loan mod, short sale or foreclosure, all will impact your credit when reported. The difference is that if you do a loan mod you will end up owing more than the place is worth (if underwater) with a credit hit... so go all the way and you will recover from whatever credit impact in 2-3 years if you maintain clean credit after. Even the example above about not being reported does not mean they will not report it, it just means they have not yet.
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