Mortgage Due Date versus Late Payment Penalty - Can the loan company call me daily?

Question

My mortgage is due on the 1st. I was told paying a week after the 1st to match my paychecks wouldn't be a problem. In fact each and every statement has a date where if I pay after that date, I owe a small penalty but I am not reported on my credit history as late.

The past couple of months I have been getting a phone call from the loan company wanting to know when I would be paying starting on the 2nd of each month. The first couple of times I informed them that my track record of paying on the 10th or 11th for the past 24 months won't be changing, but they call every day anyway so I quit answering.

I don't want to go nuclear and send a drop dead letter (and I am not sure I am legally allowed) but I do want to convince them to quit calling me until I am actually late.

I want to write a letter, but what should I cite as the reason why they need to quit hassling me?

• I have never been late, but I have used the late charge
• I have been paying on the middle of the month for 24+ months
• I have a near perfect credit report

Answer 1

If the collector is the 1st party (the employees doing the collection calling are actually employed by the party who owns the loan), then yes, they can call you daily, as they are not restricted by the FDCPA (Fair Debt Collections Practices Act).

It is very likely that they are 1st party, because you are paying before you are 30 days delinquent (most 3rd party collection work begins well over 30 days), and it would be very risky for a 3rd party collection agency to call daily.

The foreclosure rate of the past 18 to 24 months have changed the way mortgage servicers conduct "early" collections. Prior to a couple of years ago, not many calls went out before a loan was 16 days delinquent. Now, they begin collections at day 1 with text-to-voice reminder calls and predictive dialers. It doesn't cost them much, so I would expect them to continue calling. Plus, the collector probably loves you, since he/she may get some kind of credit for the payment you eventually make - makes them look good.

I would refrain from sending a letter. You can continue to pay late, as long as you pay before 30 days late - the options for credit reporting are: current; 30+ days; 60+ days; 90+ days, etc. - so anything less than 30 days delinquent at the end of the month is considered current. If your letter sounds like some kind of dispute or refusal to pay, they could report your status as some other derogatory status that would hurt your credit.

Depending on the capabilities of their software, you could request to have your payment be paid by ACH on the 10th. Their predictive dialer software may be configured to eliminate ACH accounts. Or the collector may have some way of postponing your account to after the ACH draft date - the collector may realize you are setup for ACH, and perhaps they don't get bonused for ACH accounts.

Answer 2

While IANAL, it feels like you are skating on thin ice.

Firstly I expect that the department of the company the starts to call on the second has no discretion, and they likely don't have a mechanism to track what you are doing - i.e. paying almost late every month.

No matter what someone told you verbally, the fact is your payment is due on the 1st. If you miss that, you are late. The penalties may not kick in immediately; but nevertheless, you are effectively in breach of contract.

Secondly I would definitely encourage you to sit down with the bank/mortgage holder. Discuss in person your payment schedule and possibilities; and somehow get them to agree to move the date(s) so you avoid this hassle. Notwithstanding the apparent lack of damage to your credit report, I'm not sure I would trust that over the long term. Something could get reported that could then take years to fix.

I have no idea how tight your budget is, but if you have the flexibility to save enough over a couple of months so that you can pay the mortgage by the 1st, from then on you should be able to keep that up - also thereby eliminating the problems.

As for the drop-dead letter - that really feels like somewhere you don't want to go given the long term relationship you are likely to have with the lender.

Good Luck

Answer 3

Might they let you change the official payment due date? I know here (UK) you can do that, if you ask.

Answer 4

A couple of important points to make.

First - It is not exactly accurate that 1st party collectors "are not restricted by the FDCPA." From a March 2013 CFPB report (PDF) regarding 1st party creditors: "Section 5 of the FTC Act prohibit them from engaging in unfair, deceptive or abusive practices" The relevant info is at the bottom of page 8. So no, your lender cannot call you every day as it would be abusive. Relevant section in the FDCPA about harassment.

Second - Yes, technically you are making late mortgage payments if you are not making a payment on or before the 1st of the month. Realistically though, every single mortgage lender knows full well not everyone gets paid on the exact same dates. That's why there is a late payment date and penalty amount.

I wouldn't recommend writing a drop dead letter either since it probably won't work and it could do more harm than good. Speak with your lender. They are trying to be proactive about receiving payment but are upsetting customers instead. Maybe if enough people speak up they'll get the message. As a last resort, you can stop the harassment by threatening in writing to sue if the daily calls don't stop.

Answer 5

I called the debt collector that was calling me everyday at work, (sometimes hanging up after I answered the phone) and told them that I always pay on the 15th of the month (loan due date is the 1st of each month) because that is when I am financially able to do so. The manager could look at my loan and see the history of my paying on the 15th of the month. She told me to write a letter and fax it to them stating that I wanted to "cease and desist" the calls to me. Include the name on the account, address, loan # and sign it. You need to state that you understand you have a monthly loan payment and you always make your payment. Ask them to remove your information from their system.