Monday Market Myths: Credit and Loan Modifications

Your FICO credit score gets lowered even with an agreed upon loan modification.

TRUE Just because the seller and the lender have agreed to a temporary or permanent loan modification on the property,  the seller must ask the lender to NOT have the agreed upon loan modification affect their credit IN WRITING.  Last week, Kristin DeMaria, ESQ spoke to Hollister’s Intero Real Estate Services and discussed the red flags in a loan modification.  The moment a seller 1) stops making full payments and 2) not current on their mortgage, the lender can and will send creditors to collect debt to affect their credit. Many sellers who attempt a loan modification think a loan modification halts the foreclosure process and their credit remains unaffected, yet the moment a seller receives a Notice of Default (after 30 day late payment) time starts ticking.  It is best not to assume anything in a loan modification and seek advice from an attorney.

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