I have a mortgage through Wells Fargo that I would like to save some money on. I called Wells Fargo and explained my circumstances, and they sent me a packet of information to fill out and send back to them so that they can enroll me in a hardship program. I’ve never missed a mortgage payment and I was told that enrolling would not affect my credit rating so long as I keep making my payments. But my wife, who works with financial information, says she’s seen mentions on people’s credit reports of being enrolled in these hardship programs, and she’s afraid that if that shows up on my credit report, it would have a negative effect. Does anyone know for certain how or if that’s taken into account?
If they mod your payment schedule or principal balance, it could show as slow pay or 'settled for less than full amount" on your credit report, and these are very bad things, especially on a mortgage (especially for scoring models).
If you just make regular payments but the hardship program just gets you in line for some handout, then it should not affect your credit.
Ask THEM. Each data furnisher (creditor) has their own standards and they might indicate that a revised payment plan is not considered late payments, but nothing you get from these boards can ensure what they will do.
ASK THEM and…GET IT IN WRITING.
Well there are two types of programs and internal hardship and an external hardship.
An external hardship program will undoubtedly effect your credit. But it’s better than losing your home. An internal hardship program usually won’t. An internal program is similar to negotiating a lower rate of interest.
The fact your in a mortgage “hardship” program may still effect you. Some creditors will carefully look at your credit reports. Others, like if you open a store credit card with only $500 credit line, simply look at your numbers.
A mortgage isn’t like a credit card (which is unsecured) because the bank doesn’t want your house. That’s a pain the the neck for them. They’d rather work with you and give you a rate that keeps you paying. (Within reason of course).
A hardship program isn’t really to help you, it’s to help the creditor to keep receiving payments so you don’t go bankrupt and they are SOL.
The best way to do this is simply try to renegotiate a lower interest rate w/o going into a program. If they won’t (and some companies won’t unless they sense your next step is chapter 13), then ask what exactly is going on your report and to which credit agency they are reporting it to.