Upside Down Mortgage

How Does Mortgage Modification Affect Credit

Question: Can a mortgage lender add to the principal balance during a modification?

I recently modified my mortgage and my lender added an additional $5,000 to the principal balance. When I asked about this, I was told that they were legal fees however I paid legal fees for 4 months during the "pre mod stage" because my home was in foreclosure. My payments are lower but I am concerned about the additional balance that was added. I pulled my credit report and it indicates my balance on a $124,000 loan is $129,000 which most like has affected my credit. So my debt to income is worse now than what it was before.

Answer: There were fees involved with doing the remodification (a form of refinancing). Since these weren't part of the interest, the only place they go could--since you didn't have the cash--was on the balance.

Mortgage Modification Lower Payments Stop Foreclosure Now

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