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Does mortgage forbearance affect your credit score?

Hi there,

My husband lost his job and we were recently granted a forebearance by our mortgage company (Wells Fargo) for four months (no payment of the mortgage until September 2009, when all payments would then be due). Right now, we both have credit scores in the high 700s and have paid our mortgage (all payments) to date. How will this affect our credit (if we sign the forebearance letter and stop paying until September?) Is it the same as just defaulting on the mortgage or does it look better on a credit report? Wells Fargo tells us it will show up on our credit report as a "default" but will have a notation "paying under partial payment plan". Is that better than just not paying? The reason I am asking is that he may have a job by next month in which case we will want to renegotiate our mortgage so we don't want to ruin our credit if signing this letter does that.

Thank you for any fast responses - we have to sign this asap!
Rachel

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Well since I an not a genie and can't predict what your credit score is, I suggest that you gather the following documents and either get a referal or call a mortgage broker out of your telephone book.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:41 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If you have a 1st and 2nd and default on them both it hurts a lot worse. To give you an idea I stopped paying my mortgage in January with a FICO score of 810. I checked about a month ago and it was hanging right around 600, but they bank still hasn't even filed a notice of default. In my case it shows multiple delinquencies because the first and [url=http://www.mortgagefit.com/second-mortgage.html]second mortgage[/url] are treated as separate defaults. If you only have 1 mortgage the damage may not be as bad. If you have 2 mortgages and foreclose expect any credit cards you have will be canceled as so far 2 out of the 5 I own have been. Expect this even if you have paid the balance in full on that credit card every month for 5+ years. They don't care at all. Right now they see delinquency and hit the cancel button immediately.

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Realgeni's picture
Realgeni | Joined: April 13, 2009 08:03 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

rebecyahoo

Welcoem to forum.

Any payment late by 30 days may not have a mjor impact to your credit score. But it will show up as 30 days late.

But once it crosses the 60 day time frame, then it will start makign soem serious dent to your credit score. And remember it will tsay there for 7 years, which sucks. If you think you will be able to make payment soonand get back on your feet and want to keep the property. just go ahead and make your payments.

Do nto sign anythign for which you regret later.

Good luck and feel free to ask.

Realgeni
-Good credit is easy to achieve, as long as you use it responsibly.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:41 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have a mortgage on my primary residence and now I'm severely underwater. Moreover, my income has reduced recently due to a cut in my job hours. I requested my lender for help and he told me about forbearance. How will this forbearance affect my credit rating?

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Camilia,

A mortgage forbearance will have a negative affect on your credit report. However, the drop in your credit score can't be said.Various other factors will come into play.

You should note that in case of a forbearance, the lender suspends or reduces the payment for a certain period of time. Non payment of dues or lower payments get reported to the credit bureaus. A 30-60 days late payment will reduce your credit score by around 80-160 points.

Moreover, a late payment will be considered as a negative item. This will remain in your credit report for the next 7 years as any other negative item.

Take care.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 01:41 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am unemployed right now and I'm planning to apply for mortgage forbearance with my lender. I'm expecting to get a job within the next 4 months. So, I would request the lender to give a forbearance and suspend the payments for 4 months and then I can again start paying the dues. Well, my query is whether or not I would be liable for paying the delinquent amount of those 4 months? Also, as the lender would suspend my payments, will it hurt my credit score?

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jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Betty,

In a forbearance, the lender will either suspend or reduce your mortgage payments for few months so that it becomes affordable for you to pay off the dues. It will be the lender's discretion whether or not he would suspend the dues.

The mortgage dues will be suspended by the lender on your request. However, it will not be forgiven. Thus, once you get a job, you will have to pay off the delinquent dues. The lender may add the delinquent amount to your monthly payments. This may increase your monthly dues to some extent.

As you would be late in your monthly mortgage payments, the lender will report the late payments to the credit bureaus. This will lower your credit score by around 80-160 points.

Thanks,

Jerry

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Is there a law that requires a lending institution (bank) to report late payments on your mortgage when you enter into a forebearance agreement? My logic is you get dinged for non-payment the exact same for making a reduced payment offered to you from the bank.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Toy,

I don't know about laws but as far as I can understand, the lender can report a forbearance agreement to the credit bureaus and it will affect your credit.

Thanks

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have read several responses on the web (e.g., eHow) that indicate a mortgage forbearance will not affect your credit score if you resume payment when the forbearance ends along with outstanding balance; however, I see on this site numerous people think it will affect one's score in every case. Which is it?

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smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Brent!

Welcome to the forums!

Well, if the late payments are reported by the lender to the credit bureaus, then it will definitely impact your credit.

Feel free to ask if you've further queries.

Sussane

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johndzialo1's picture
johndzialo1 | Joined: August 21, 2012 02:18 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

It is hard to tell exactly how the forbearance agreement will affect your credit score without knowing all of the information regarding your credit history. There might be some limitations to the amount of loan you will get from the lender. If you are trying to sell your home: If there is an NOD on title (Notice of Default) most lenders have some issues with that. They usually don't want you to be selling the property to a family member. Hope this helps.

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Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I recently went through with a 3 month forbearance on my home. Basically the only thing this did for me was eliminate harassment of payment and late fees. It affected my credit the same way as if I had just not paid it for 3 months. My recommendation is don't do it!! It's definitely not designed to benefit the consumer at all. It may sound like a good plan or option but for me it was not. I was able to make my full payment when the forbearance came to end for all months missed and pull myself back up. This was all last fall. Now I cannot refinance my home for a better rate due to the credit decline and reports sent to them. You would think if you pay everything at the end, they would report payment in full and ask for it to be removed. I was under the impression and explained to me that it works very much like a student loan forbearance. It does not even come close to the same. It may be a good option for some but if you are driven and feel you can pull yourself up quickly, find another solution if at all possible.

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jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for sharing your opinion, Julia. :)

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