Beware Of Mortgage Loan Servicers Bearing Gifts: Hi-Credit Score Homeowners Get Slammed After Receiving Loan Mods Despite Never Missing House Payment

A recent story in The Oregonian serves as a cautionary tale to those "high credit score" homeowners who are current on their mortgage payments, but nevertheless considering seeking a loan modification:

• Here's a twist: What if your lender actively encouraged you to modify your loan -- and then reported you as delinquent, prompting credit card companies to treat you as a deadbeat? That's what happened to two local CitiMortgage Inc. customers. Both spent hours on the phone trying to straighten out the mess, and one is still unresolved.(1) It's still the Wild West out there when it comes to staving off foreclosure.

For the details of how two Oregon homeowners were (temporarily) screwed over on their credit histories after receiving loan modifications they were encouraged to take from their loan servicers, despite never having missed any mortgage payments, see Modifying loans creates credit mess, not relief.

In related stories, see:

• Credit.com: Credit Reporting Industry's Decision on Loan Modifications Boxes in Consumers,
• Bloomberg News: Cheaper Mortgages Trigger Lower FICO Scores for On-Time Payers,
• Mortgage Servicer Encouragement To Default On House Payments To Qualify For Workout A Common Complaint From Homeowners Seeking Loan Modifications.

(1) I have been informed that, subsequent to the original publication date of this story in The Oregonian, the remaining unresolved credit report mess for one of the homeowners has now been cleaned up by CitiMortgage (apparently, the folks over at CitiMortgage read The Oregonian). An example of a mortgage lender or loan servicer feeling shamed by the media spotlight into doing the right thing, maybe???