COVID-19 Delayed Mortgage Payments affect FICO scores?

Question

Hi all-

I've got about 8 mortgages (more if you include HELOCs). As many of you have already heard Fannie and Freddie are directing lenders to offer mortgage relief to their mortgages which entails a forbearance of the loan payments for up to 1 year. This is tacked on to the end of your loan term.

The news stories indicate that there will be no late payments reported to the credit bureaus.  HOWEVER, what I am not 100% convinced on yet is if there is a negative effect on my FICO score because in the past any mortgage in forbearance is reported to the credit bureaus under a different code which then in turn lowers your FICO score.

Does anyone have inside knowledge of how this actually does or does not affect FICO scores? Many, if not most of is would welcome this kind of relief but I am much more hesitant to do it if it affects my FICO scores in any way.

Chris Mason · Answer

If you have the option, make your payments on April 1st.

Put yourself in the shoes of a credit desk manager at a mortgage bank. Even if there is no direct impact on the FICO score, it's not rocket science to separate out borrowers who do, and do not, have mortgage forbearance on their credit reports, and offer them a different rate sheet.

They already do this with everything from FICO scores to a declared bankruptcy to child support payment issues. I don't see why this would be any different. It's not a protected class like race or religion.

Russell Brazil · Answer

Even though late payments are not going to be reported........your monthly payments which are reported, are not going to be reported. FICOs algorithm is proprietary, so we dont know what affect say 4 or 6 months of missing payments will have on scores. I imagine it will affect scores to some degree.