Mortage Problems are walloping Credit Scores

Homeowners facing a potential short sale, foreclosure or just walking away should consider the impact to their credit scores.

Loan modifications that roll late payments and penalties into principle debt owned on the house can acutally increase borrowers scores modestly, while refinancing underwater mortgages may have little effect according to Vantage Solutions.

Short Sales can trigger large declines in credit scores, according to researchers. A homeowner with excellent credit may see a 120 - 130 point decline.

Homewowners who choose to walk away and stop payments should expect their scores to fall 140- 150 points, plus negative marks on their credit bureau files for up to 7 years.

People filing for bankrupticies remain on borrowers credit bureau files for 10 years.

But there is good news.......homeowners facing financial stress can keep the negative impact to their credit scores to the minimum if they contact their loan servicer or lender when they first discover that they may have a problem making monthly payments. Some lenders may be difficult to talk with so it's important to keep up the pressure, call often, and ask to speak to a manager in the loss mitigation department.

Further assistance may be obtained by talking with a good Real Estate Attorney


Excerpts from C.A.R Mortgage Update