Creditnet News Story
HAMP program could hurt a person's credit score
Thursday, October 22, 2009
By Sam Lee
Recently, the Obama administration set a goal of getting 500,000 home loan modifications in by November 1.
Recently, the Obama administration set a goal of getting 500,000 home loan modifications in by November 1.
In fact, the goal was achieved ahead of schedule in the beginning of October. And though people may be looking for help through mortgage modification programs, consumers should keep in mind that they may hurt their credit score.
A recent report from the Wall Street Journal notes that lenders were told by the Consumer Data Industry Association to report payments made through loan modifications from the Home Affordable Modification Program (HAMP) as a partial payment, which could hurt a person's credit score. For some credit scoring agencies, a partial payment can be as bad as a missed payment.
The Journal's report, however, noted that a solution is on the way.
"Starting in November, lenders will be able to use a new code that specifies whether a mortgage was modified under the government's plan," the report from the paper stated.
Recently, the Internal Revenue Service (IRS) introduced a new form that should help people applying for HAMP get the records they need. Form 4506T-EZ will allow people applying for the program to get their tax transcripts as long as they used 1040 forms to file their taxes.
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