Modification Credit Score Drop?

[emmajacob36]

Has anyone done a Mortgage Modification ? Some banks notify Credit Bureaus and some don't.....if they do...does you credit score take a BIG drop???? and does it drop EVERY month?

[JoshuaHeckathorn]

What usually kills your credit scores in the first place are the delinquent payments that the mortgage company reports to the credit bureaus. Then they may even report the loan modification as "settled" or "not paid as agreed", which the FICO credit-scoring model sees as a big negative on your credit reports. Your scores will plunge, but it should happen all around the same time. You shouldn't continue to see drops every month.

[HousingCounselor]

Hello! I'm a housing counselor (hence the name) lol
What I have to say about that is if you're already behind, a loan mod won't hurt your score. It actually improves it because you go from being delinquent to paying your mortgage as agreed. If you're modifying your loan and you're not behind. A HAMP or any other modification could lower your score. Also they may report that you're paying under a modified agreement. Which when other creditors look at your report, they can tell that you're paying under a modified plan.

The damage to your credit happens quickly but then improves over time. The more on time payments you make under a modified plan improves your score more and more. It's better to have your mortgage modified than to not and foreclose. You may not even be able to rent an apartment if that happens. If you need a mod so that you don't foreclose then take advantage of it. A foreclosure is much more damaging.

There's an hierarchy to mortgage delinquency and the damage it does to your credit scores.
Loan mods are better than short sales
Short Sales and (short Pay off's) are better than deed in lieu's
Deed in Lieu's are better than foreclosure

Hope this helps.