Mass. Resident’s Credit Damaged During Loan Modification

March 25, 2010 - Boston - A recent case in Massachusetts illustrates how unsuspecting homeowners can face severe damage to their credit scores during a home-loan modification process. According to reports at ConsumerAffairs.com, a Winthrop resident saw his credit score plummet after he attempted to renegotiate his home loan with Citi Mortgage through the federal Home Affordable Modification Program (HAMP).

Identified only by his first name, Thomas, this Massachusetts resident was approached by Citi Mortgage in March 2009 to see if he wanted to modify his mortgage. Even though Thomas had recently lost his job, he and his wife were still paying their mortgage in full and on time every month. Citi Mortgage enrolled Thomas in HAMP's 3-month trial period, where their payment was reduced from $2,500 to $1,500.

However, after the trial period was up, Citi Mortgage told Thomas he didn't quality for a permanent HAMP loan modification because he was receiving unemployment benefits. As a result, the principal of his mortgage was increased by $17,000 due to late fees and interest. The bank also reported that Thomas was in foreclosure, which seriously damaged his credit score.

This is just one example of how a bank can negatively affect your credit score during a loan modification process. Contact a Massachusetts class action attorney right away if you are encountering the same type of treatment from a bank while you attempt to renegotiate your mortgage.