FreeScore.com Explains Benefits of Government Mortgage Settlement
Agreement Can Help Borrowers Get Better Control of Their Debt
Norwalk, Conn. — February 10, 2012 — The $25 billion settlement between the government and the nation's largest mortgage servicers will enable many borrowers to obtain better interest rates. Consumers can speed up the process by knowing their credit scores in advance, according to FreeScore.com.
The settlement announced Thursday includes $17 billion for homeowner relief, $5 billion in cash payments to states and federal agencies, $43 billion for refinancing and $1 billion for the Federal Housing Administration.
U.S. Attorney General Eric Holder said the settlement is an attempt to correct "the wrongs that led to the housing market collapse. As a result, struggling homeowners throughout the country will benefit from reduced principals and refinancing of their loans. With this settlement, we recover precious taxpayer resources, fix a broken system and lay the groundwork for a better future."
As a result of the settlement, some one million borrowers will have their mortgage debts reduced or will be able to refinance at lower rates. In addition, 750,000 borrowers who lost their homes in foreclosures between 2008 and 2011 will receive payments of about $2000.
Potential homebuyers who have a firm understanding of their financial standing before seeking a loan have a greater chance of receiving the best available rate. Consumers can gain this understanding by taking stock of their current expenditures. Plus, they can review their budgets and credit reporting to help them decide what type of monthly payment is affordable. This knowledge will help in determining their best option in working with a mortgage servicer (the company that receives the mortgage payments).
Under the settlement, the new servicing standards make foreclosure a last resort. It does so by requiring servicers to evaluate homeowners for other loss mitigation options first. Those loss mitigation options may include a reduced mortgage, or a refinanced mortgage with lower interest rates. Lowering the monthly mortgage payments can help borrowers not only avoid foreclosure, but can free up some money to pay down other debt. Paying down debt may be positively reflected in a borrower's credit score and overall profile. FreeScore.com's Credit Score PredictorSM feature enables its members to try different credit scenarios to measure the potential impact on his or her credit score.
FreeScore also provides credit report and score information from the three major US credit bureaus â€“ TransUnion, Experian and Equifax. Consumers and borrowers need to review their credit information from all three bureaus in order to get the best understanding possible of their financial condition and standing.
Lowering the monthly mortgage payments can also help a borrower reach his or her 2012 debt management goal.
About FreeScore LLC
FreeScore.com is the leading online consumer credit service, providing members with affordable, unlimited access to all three credit scores and their complete credit profile. For more information, go to FreeScore.com. FreeScore.com is a service of FYI Direct, Inc.