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Key an Eye on Your Mortgage Payments

Key an Eye on Your Mortgage Payments

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. T

herefore, 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

In The News:

US MBA's Mortgage Applications Index Fell 1.5% (Update1)
Bloomberg - Aug 20, 2008
... as fewer homeowners sought to refinance their loans The Mortgage Bankers Association's index of applications to buy a home or refinance a loan dropped ...

Mortgage application volume hits multiyear low
The Associated Press - Aug 20, 2008
And while fewer new homes are being built, fewer customers are also refinancing existing mortgages. A sharp drop in refinance volume in recent weeks has ...

Mortgage volume fell 1.5% last week: MBA
MarketWatch - Aug 20, 2008
The MBA survey covers about half of all US retail residential mortgage applications. The volume of refinance applications fell an unadjusted 3.7% compared ...

Mortgage Applications at lowest level in eight years
Bizjournals.com, NC - Aug 20, 2008
On top of that, fewer people are refinancing existing mortgages. On Tuesday, the US Department of Commerce said construction of new homes and apartments in ...

Applications Decrease Slightly In Latest MBA Weekly Survey
Originator Times - Aug 20, 2008
The four week moving average is down 1.7 percent, while this average is down 7.7 percent for the Refinance Index. The refinance share of mortgage activity ...

Ease in rates fails to spur home loan apps
Inman.com (subscription), CA - Aug 20, 2008
The MBA's Weekly Mortgage Applications Survey showed a 3.7 percent decline in refinance applications from the previous week and a 0.7 percent decrease in ...

US mortgages hit rock bottom
Only Finance, UK - 17 hours ago
Mortgage applications in the US fell to an eight-year low last week as purchases are either slowing down or being abandoned completely in wake of economic ...

Housing And Economic Recovery Act
Mondaq News Alerts (subscription), UK - 13 hours ago
The Act also expands the target population served by the FHA and creates the "Hope for Homeowners" voluntary FHA-insured mortgage refinance program. ...

Mortgage penalty unlikely to vanish
Fall River Herald News, USA - 2 hours ago
I have a prepayment penalty on my mortgage loan for three years. I’d like to refinance sooner. Is there a way a lender can waive the penalty? ...

COMMENTARY: FHA is riding to the rescue, taxpayers beware
Reuters - 8 hours ago
(Ann Schnare is an economist specializing in housing and mortgage finance. She was former senior vice president for corporate relations at Freddie Mac and ...

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