LOAN MODIFICATION CREDIT REPORTING TRAPS

In our years of fixing credit reports, we have seen a number of errors on peoples’ credit reports caused by the banks. These include:

1. Reporting you as late during the loan trial modification period. When modifying your mortgage, banks usually give you a 4 month loan modification period wherein they lower your payment. If you successfully make those 4 lower loan payments on time, you usually become entitled to a loan modification. Problem is that the bank reports you as late during each of those 4 months even though it said you could make the new lower payment.

2. Refusing to remove late payments as promised. Some lenders agree to remove late payments in exchange for entering into a loan modification program. Problem is that when the loan modification is done, the lender refuses to remove the late payments.

3. Lender refuses to honor its commitment to give you a permanent loan modification. OK. This is not so much a credit issue as much as it’s an ethical one. We have seen loan servicers promise a loan modification and then renege after the consumer made all of the trial period loan modifications.