The nearly $75 billion, Making Home Affordable program, introduced by the Obama administration, is effecting homeowners' credit scores. While the program is certainly helping borrowers avoid foreclosure, it may come at the cost of lowering their credit scores. Some homeowners are finding when they enroll for Making Home Affordable's services, during the "trial phase," when required to make at least three payments, their credit drops drastically. This is because when the credit bureaus get wind from the mortgage companies their homeowner is asking for a loan modification, they interpret it as a "danger"-deeming the program's assisted homeowners, as having financial woes.

Sometimes, the Obama mortgage assistance has been responsible for lowering credit scores by 100 points, making it more difficult for the borrower to get a loan or apply for anything which requires a credit report. Housing Counselors such as Eileen Anderson, the Senior VP for the Community Development Corp. of Long Island, New York, believe the program's effect on credit scores is simply unfair. Anderson asked, "why should people's credit be hurt even worse when they're trying to do the right thing?" Why are homeowners being penalized for receiving government assistance?

On the flipside, some feel the drop in score is a good indicator for telling one's financial status. "People who sign up for loan modifications would not be asking for help unless they were having severe money troubles," said Norm Magnuson, a spokesperson for the Consumer Data Industry Association, a Washington based group, representing the credit bureaus. "The consumer is going into the program because they're in a financial bind, other lenders would need to be aware of that."

California's Housing Finance Agency is under the supervision of the Housing and Urban Development which passes its relief plan to the U.S. Treasury Department for further approval. Currently, the agency is focusing more on providing low cost housing to families with low to moderate income. The Keep Your Home California programs were launched by the CalHFA with an objective of assisting in community revitalization and preserving the American dream of home ownership especially to troubled borrowers in the state.

When everything is said and done, the best any government assisted homeowner can do is make their scheduled payments on time, avoid falling behind and eventually, their credit score will increase. It certainly doesn't help when applying for assistance to see your credit score drop, however, just know as long as payments are being made, any slumping credit can easily be revitalized.

Learn more about Obama Mortgage Relief Plan Qualifications.