Those interested in joining the $75 billion Making Home Affordable program that the Obama administration began should take a closer look at all that entails. Homeowners signing up for the program are getting a little surprise: their credit scores are dropping. Those borrowing money and making all their payments but on the verge of default can have their credit score reduced by as much as 100 points as a result of the new program. This auto-adjustment for credit score can make it difficult for a person to get a loan or find a job. Individuals applying for the program are those that are in a financial bind.
There are housing counselors that say this new program is unfair to people applying for the program because they are not warned about the credit change before applying for the program. As a result there are many unhappy homeowners angry over the fact that a program designed to help them has such a hefty penalty. There are others who see this as a good program. The Obama administration says that the acknowledge the program may result in low credit score but it is better than the alternative, foreclosure which will bring more trouble on families. The credit rating industry defends the practice, they feel that the people are joining the program are those who have severe money troubles.
According to the Obama program, those who are able to get accepted into the program and get their loans permanently modified, the lenders will update the credit bureau. Their credit score will actually end up going up over time if they continue to pay back their loan. Even if a person’s credit is reduced they can still build it back if they continue to pay bills like they have agreed to and use their credit wisely.Posted by Tri Cities Washington Real Estate Agents Joe and Colleen Lane Posted by Colleen Lane on