Creditors will report a Making Home Affordable, MHA, loan which might seem like a bad item, but it usually helps borrowers keep their home and avoid more serious incidents. When the MHA program first started, the normal credit reporting codes hurt credit scores of participants. As long as you abide by the rules of your MHA program, your credit score will be fine in 2011.
Identification
Banks will report a mortgage in a MHA modification program. In 2011, a MHA account appears as ""modified under federal government plan" on a credit report, according to the Making Home Affordable website. Lenders do not have to report any account to the credit bureaus, but most mortgage providers do this to keep credit bureau files as accurate as possible.
Effect
When the federal government introduced the MHA program in 2009, modification usually hurt scores, because the government told lenders to report accounts taking part in MHA as partially paid. Anything less than "paid as agreed" damages a credit score. In 2010, the government fixed this by authorizing a new reason code for consumers taking part in a federal modification program.
Considerations
The status of your mortgage before entering an MHA program determines how the creditor reports it to the bureaus. If you are in default before the trial period -- a three-month testing time to see if the loan modification helps you meet payments -- the creditor will report the account as delinquent unless the modification lets you catch up on the missed bills. If you are not behind on payments, the creditors reports the account as "paid as agreed."
Tip
Always ask the lender how he will report the modification to the credit bureaus. As of 2010, taking part in an MHA program does not lower your credit score. The Fair Isaac Corporation, designer of the popular FICO score, does not have enough data to determine how the MHA program affects borrowing habits. Since most people requesting help from MHA are having trouble paying a mortgage, there is a good chance that just taking part in the program could lower a person's credit score in the future.
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