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Mortgage Default Notice

Question: How do the following affect your credit?

Foreclosure vs. notice of default vs. missing two mortgage payments, vs. short sale after notice of default. Does a short sale where a person with a loan convinces the lender to take less than what is owed have a larger negetaive effect on credit than curing the loan? And to what extent?

Answer: If you have the ability to "cure" the loan that is the best route to travel. Even if you cure the loan and then sell so you don't get yourself into the same position again. You do not want a foreclosure to go through. If you do not have the ability to cure the loan, then you will want to try to work a short sale. However there are deadlines on a short sale so make sure that if you decide to go this route that you move quickly.

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Mortgage Default By Race

If you're in debt, your credit rating is extremely important because it represents a significant part of your ability to get out of debt. The better your credit rating, the easier you'll find it to refinance your debt, cutting your monthly repayments and leaving you more money to pay off your debts in a shorter period of time.

However, there are so many credit myths doing the rounds that it's difficult to know what might affect your credit rating. In fact, the gap between what people think and what actually affects credit ratings has grown to an unprecedented level.

For example, more than 50% of people don't understand what a credit rating is, how it affects their ability to borrow, and more importantly, how it affects their ability to get out of debt. So here's the biggest credit myths and the real truth behind them.

Credit Myth 1: If You're On A Credit Blacklist Your Credit Rating Will Be Poor

This is one of the most popular credit mistakes. It's also the myth that's furthest from the truth. So let's get this straightened out right from the beginning. There is no credit blacklist. It just doesn't exist.

Yet that doesn't stop millions of people from believing in it. More than 40% of people who are refused credit blame their situation on some mythical list that bans all lenders from granting them a loan.

If you are refused credit, the only reason is that your credit rating displays a financial history that makes lenders nervous about your likelihood of repaying their money.

Lenders like continuity. They like lending to people who have a history of making regular loan repayments on time because they can be more confident that they will get their money back. That's why credit reports carry historic details of the loans that you've applied for, been granted, paid off, any defaults, previous addresses etc.

The practice of red lining, where lenders discriminate against individuals or whole communities on the grounds of gender, religion, ethnic origin, race or sexuality, is illegal in many parts of the world, and due to competition among lenders is less of a problem than in the past.

So if you want to increase your chances of being granted a loan at better rates, you don't have to escape from a blacklist, just provide some stability to your credit history. Try to stay at the same address for a number of years, show lenders that you have the ability to repay a loan to completion, and make sure that you're registered to vote.

Your credit report will state whether you're on the electoral register and lenders place great emphasis on this fact as it helps them to double check who you are and where you live.

Credit Myth 2: Your Credit Rating Is Set By The Credit Reference Agencies

This is also another credit myth that's complete and utter rubbish. But more than 50% of people believe that credit reference agencies set credit ratings.

No, no, no, no, no and just to make certain, no!

Credit reference agencies just collect information about your financial history and present the facts in the form of a credit report. This includes information about your existing sources of credit (personal loans, credit cards, mortgages), your repayment history and whether you have any payment defaults, court judgements or bankruptcy orders against your name.

Then, when you apply for a loan, your chosen lender can request this information from one of the credit reference agencies and decide whether you meet their lending criteria. In most cases the lender will use your information and their own mathematical formula to calculate a credit score. If your circumstances generate a certain number of points you get the loan. If your score is too low, they will reject your application.

Credit reference agencies only report facts from your financial history. And if you dispute any of these facts, there are various procedures to resolve the situation.

Credit Myth 3: Previous Occupants Of Your Address Can Affect Your Credit Rating

More than 70% of people believe this extremely convincing myth. And it's easy to see why. The general belief runs like this - You ask for a loan, the lender checks your credit report, your current address causes alarm bells to ring because it's the same address that already appears on one of the mythical credit blacklists. The lender becomes panic stricken and their computer spits out a loan rejection letter. End of story.

Rubbish!

From a lender's point of view, it doesn't matter who used to live at your address. Credit is a personal matter. All that lenders are concerned with is your ability to repay the money that you've applied to borrow. So they'll look at your individual circumstances. For example, if you've changed address in recent years, they'll want to know your old address so that they can check that you were living where you said you were, and not to find out whether the previous or subsequent owner is a bankrupt.

About the Author:

For more information on how to
get out of debt
, visit Stuart Laing's website at
icanhelpyougetoutofdebt.com
.

Source - Credit Myths - Mistakes That Will Make Your Debts Worse - Part 1

Holtz-Eakin on McCain: MSNBC 09/08/08

Mortgage Default On Credit Report

Question: NC Mortgage/Deed Question?

I posted a similar question but left out some details so let me try again...I live in NC. My husband and I purchased a house after we married but my husband wanted it only in his name due to his credit being better than mine.

BUT the deed is in both of our names.

So, my name is not on the mortgage because my credit would have brought us down:( BUT now the marriage is not going well and he is threatening me that if he defaults I have to pay for it.

SO - right now his name is on the mortage - mine is not. Both names are on the deed.

Who is responsible for the mortgage? If he defaults on it am I responsible? Will it show up either good or bad on my credit report?

If someone can help me understand the legal ramifications I would greatly appreciate it. THANK YOU!!

Answer: I agree, that's messed up. He does the "family" a favor and you want to stick it to him and save your own hide. I hope you do the right thing and pay your half. Maybe you two should think about selling the home and going your separate ways.

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