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A Bill That Would Shield Homeowner’s Credit Ratings

Real Estate Agent with Pacific Inter Capital Solutions

Homeowners deserve to be shielded from unfair credit ratings when they have paid their mortgage modifications on time and according to their agreement. HR 5743, the Protecting Homeowner's Credit History Act, would shield homeowner credit ratings from adverse reports after the homeowner has a mortgage modified by a lender.

According to Congresswoman Jackie Speier, who introduced the bill…

"To play by the rules, modify your loan and then have it as a blemish on your credit report is just flabbergasting; it adds insult to injury," said Speier. "The credit system should not punish responsible homeowners who modify their mortgage payments to keep their homes."

“The deck has been stacked against millions of American families because the economy tanked,” Speier added. “Home values have plummeted and one in four homeowners in America own a home worth less than their mortgage. This legislation protects homeowners from getting dinged on their credit scores simply because they’ve had their loans modified.”

Sadly, after going through the (many times long) process of getting a loan modification to stave off foreclosure, the struggling homeowner discovers that their credit rating has taken a serious hit.

Some of these homeowners have made on-time modified payments approved by their servicers, only to find that their payments are treated as delinquent or incomplete by the same bank or servicers who approved for these modified payments.

Kevin Stein, associate director of the California Reinvestment Coalition, which promotes access to credit, said he thinks the legislation sounds beneficial because it would protect "people who want to meet their obligations, who are not walking away, who are trying to negotiate with their servicer as everyone is advising them to do."

Stein further stated: "As a society we're promoting these workouts; then to ding people who have gone through that process - which is no easy process - is very unfortunate." Those who have gone through this process would applaud his recognition that this "is no easy process".

HR 5743 would prevent these banks and servicers from reporting, as delinquent, any on-time modified loan payments, as well as prohibit a credit reporting bureau from including this unfavorable information in the borrower's credit report. Homeowners need to be shielded from unfair credit ratings when then have paid their mortgage modification payments on time.


Joe Harvey
Lake Worth Real Estate - Lake Worth, FL

I agree that this needs to be passed but there are so few people with loan mods it wont help a lot of people. Something has to be done to help across the board..

Jul 20, 2010 04:22 AM