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Check your Mortgage Payments
by Kevin Adelsberg
Recent changes in accounting practices at banks could have a
chilling effect on some mortgage holders, especially those that
use payment coupon books to keep track of their loans.
In previous decades, when a borrower missed a payment on a
mortgage, the lender would often consider them one month behind
until they eventually caught up. Most lenders would impose a late
fee and other interest or penalties, tacking them onto the back
end of the loan as long as the lender stayed current with the
rest of their payments.
With the number of bankruptcy filings creeping higher each year,
and with increasing pressure on lenders to return dividends to
shareholders, mortgage companies have quietly resorted to
creative accounting practices to put pressure on slow payers.
Under new rules, a mortgage lender can ding your credit report
every month that you are behind on a payment. In addition, they
can impose penalties and late fees during the month you missed
your payment. To add insult to injury, if you neglect to catch up
with your payments the following month and you don't pay all of
your late fees, the lender can impose late fees - on your late
fees.
You might miss a payment for any number of reasons. It could be
something as innocent as a check getting lost in the mail. Or it
could be a symptom of a bigger problem like a divorce or a job
loss. Either way, you receive equal treatment. And the news gets
worse.
Many mortgage lenders have added clauses to their agreements that
stipulate they can initiate a foreclosure on your home if you
miss a predetermined number of consecutive payments, or if you
miss too many payments in a given period. Therefore, you may only
be a few hundred dollars behind on your mortgage, but you could
find yourself in the same situation as someone who has not made
payments on their home in six months.
For example, if your March payment arrived one day late, you
incur a $50 late fee. Because you use a coupon book to track your
loan, you might not even know you were assessed that fee in the
first place. Although your next five payments arrived on time,
your lender could charge you a late fee in April for failing to
pay your March late fee. They could then charge you two late fees
in May, for missing your March and April fees.
Before long, the late fees snowball out of control and you have
to take drastic measures to save your home.
Therefore, experts recommend that you use secure online banking
to make mortgage payments that can be independently traced and
verified. Call your lender's automated customer service line at
least once each month to confirm that your payment has been
received, and that you are current on all outstanding
installments and past late fees.
A little extra care and recordkeeping on your part can prevent
much frustration.
Kevin Adelsberg is a writer for FasteMortgage.com.
For additional articles and an extensive resource for
everything about mortgages, please visit us at:
http://www.FasteMortgage.com
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