Late charges imposed by mortgage company

Mailbag

April 04, 2004

Dear Mr. Azrael:

I recently refinanced my home with a new mortgage company.

On my monthly statement, it says that my mortgage payment is due on the first of each month; it's late after the 15th of each month.

I sent my payment in last month on the 10th, thinking that this would be enough time for my payment to be posted. However, my payment was not posted until the 20th and I was assessed late fees.

When I called to ask why the payment took 10 days to post, I was told that I needed to send my payment 15 days prior to the due date and they would not refund my late fees. This month, I sent my payment on the 4th to see how long it would take to post. My check cleared on the 9th (three business days).

Is this legal? It seems to me this company is not honoring the grace period that is on its statements.

Dear Reader:

Federal regulations, which apply to most residential mortgages, allow a late charge to be imposed when a mortgage payment is received more than 15 calendar days after the due date.

For your loan, late charges should be spelled out in the note you signed at closing. The standard form, approved by Freddie Mac and Fannie Mae, typically provides: "If the note holder has not received the full amount of any monthly payment by the end of 15 calendar days after the date it is due, I will pay a later charge to the note holder."

The mortgage company may be legally wrong to collect a late charge if it actually received your payment within 15 calendar days after the due date.

I suggest you write to the customer service department of your mortgage lender and inquire specifically when your payment was received. Also, ask the lender to advise you if there is a delay between the day mortgage payments are received and the day they are posted.

The legality of the late charge may depend on the lender's answers to these questions.

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