Dear Liz: Our mortgage is due on the first day of each month. A late fee is due if the payment is received by the mortgage company after the 16th. The mortgage company calls me if they have not received the payment by the fourth. I hung up on them the last time they did it. They followed up with a letter about getting debt crisis counseling (which didn’t go over real well in my household). Are they allowed to harass me if they don’t get their payment in four days? What about the grace period? Can they report my payment as late?
Answer: Let’s tackle that last question first. Most creditors don’t report a late payment to the credit bureaus until the account is 30 days or more overdue. If you make a mortgage payment within the grace period, you shouldn’t have to worry about damage to your credit scores.
You may, however, have to put up with the calls and suggestions about credit counseling. Many lenders and loan servicers these days are using various software programs to gauge the ongoing risk a borrower may default and are trying to step in early when red flags pop up. Your mortgage company could be singling you out for special attention for a variety of reasons. Perhaps you’re underwater on your home, owing more than the property is worth, and the lender is afraid you’ll walk away. Other factors that could trigger a call include a history of late payments, rising debt on other credit accounts or a drop in your credit scores.
It’s also possible that your mortgage servicer is just being paranoid and harangues every borrower who doesn’t pay on or before the due date.
You have a few choices. You can write to the servicer and ask it to stop contacting you during the grace period, but there’s no assurance the calls will stop. You can ignore the calls. Or you can move up your payment to land on or before the first of the month.