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I'm a first time homeowner (USA) and just started making mortgage payments. My loan was sold to a different servicer within the first month of the loan, so I only made one payment to the first servicer. My first payment to the new servicer was delayed because of some technical issues with their online bill pay system, or possibly my credit union (servicer claims that the CU rejected the payment several times, CU claims no debit request was made). Anyway, the payment finally went through 11 days past the due date, but still within the 14 day grace period for the new servicer.

So, will this be reported as a late payment and impact my credit score? Or is it fine since I was within the grace period and no penalties were incurred?

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    If they do, you can raise a huge stink, and they should correct it for you since it is not your fault at all. Of course servicers are well aware of this issue, so they're not going to create problems since they dramatically increase customer service workload, and they don't have the staff to deal with a legion of enraged customers.
    – Harper - Reinstate Monica
    Oct 13, 2022 at 22:33

2 Answers 2

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Federal law provides a 60-day grace period for untangling payments when a mortgage is sold.

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    Consumer Financial Protection Bureau rule § 1024.33(c)(1). Looks like late fees are also prohibited in this 60 day grace period. consumerfinance.gov/rules-policy/regulations/1024/33/#c-1
    – Lithium
    Oct 14, 2022 at 18:23
  • @Lithium: Thanks for the link! However, based on both the bankrate.com article and the actual rule you linked to, I'm not convinced that this 60-day grace period actually applies to the OP, since (at least on its face) it seems to only apply "if the transferor servicer (rather than the transferee servicer that should properly receive payment on the loan) receives payment on or before the applicable due date", i.e. if the lateness resulted from the OP having mistakenly paid the previous owner of their mortgage instead of the new owner. Of course, I could be mistaken.
    – Ilmari Karonen
    Oct 14, 2022 at 18:32
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In general, that 14 day grace period is for whether or not they will charge you a late fee. The grace period for reporting a late payment to the credit bureaus is typically at least 30 days. You should be fine.

Side Note: Having gone through this multiple times, it seems like they are fairly lenient in the first few months after a switch. (Andrew Lazarus' answer points out the law requires 60 days; and in my experience sometimes they go even longer.) I had a mortgage that was seemingly changing servicers every year, and one time I didn't realize it switched and I was still auto-paying the old servicer, who continued to forward the money to the new one, until they stopped and sent a payment back to me. That got my attention and I had it corrected quickly, but I'm pretty sure I was more than 30 days past due on that payment. Not only did the new servicer not report it, but they also didn't even charge me a late fee.

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  • With my mortgage, it is explicit that there is no late fee for payments in the grace period. I find that the grace period makes no sense.
    – minou
    Oct 14, 2022 at 13:09
  • @newname The grace period just provides a false sense of escalation for the consumer. It's the same reason you tell a contractor that something has to be done in 30 days even though your big dinner party is in 45 days.
    – MonkeyZeus
    Oct 14, 2022 at 14:15

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