FUEGO
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- Nov 13, 2007
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Trial loan modifications hurt borrowers' credit histories - Dec. 28, 2009
Why does it surprise this gentleman that defaulting on your debts (which is what a loan workout/modification is) leads other creditors to think that you are more likely to default on future debts?
And if this guy is so broke that he can't pay the $565 extra that he originally agreed to, does he really need a NEW car with the concomitant loan and monthly payment?
Amazing!
Just wanted to share a funny article I saw this morning. Seriously? Guy doesn't particularly care to keep paying his mortgage that he agreed to, gets it modified and it dings his credit. Then he can't find a NEW CAR LOAN for less than 12%.Axelrod, a municipal employee who lives outside Chicago, entered a trial mortgage modification program this spring.
He had not fallen behind in his mortgage, but he was finding it harder to make ends meet after his overtime was cut and his property taxes skyrocketed. Told it would not hurt his coveted 750 score, Axelrod secured a $565 reduction in his monthly payments.
Eight months later, Axelrod is still stuck in the trial modification, trying to satisfy his loan servicer's endless requests for documents.
And to his horror, his credit score has plummeted to 644.
"It's completely destroyed my credit," said Axelrod. "If I had known it would affect my score, I would have never entered the program."
....
Axelrod is already feeling the impact of his lower credit score. He ordered a new car this summer, believing it would come with a lower monthly payment. It arrived in mid-December.
But because of his newly blemished credit background, his two credit unions turned him down for a car loan. His dealership told him the best he could get is a 12% rate, a hefty hike from the 4.7% he was paying before.
"This is the biggest nightmare," he said. "My credit is completely useless."
Why does it surprise this gentleman that defaulting on your debts (which is what a loan workout/modification is) leads other creditors to think that you are more likely to default on future debts?
And if this guy is so broke that he can't pay the $565 extra that he originally agreed to, does he really need a NEW car with the concomitant loan and monthly payment?
Amazing!