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I just bought my 4th rental property. I always set up everything for automatic payment after the 1st day and before the 2nd week of the month. The reason being, I get all of my rents by that time. Not that I HAVE to get the rents first. But if I'm ever close one month due to a lot of repairs or something, it makes it easier to know I've got the buffer.

I've had mortgages with Wells Fargo, Bank of America and Nation Star. All 3 had payment due by the 1st (same as Flag Star) and never had issue with me paying after the 1st but before the grace period end date (the 15th). Nation Star on the other hand gets down right overbearing by about the 5th of the month. Even after the payment goes thru, they will call every day leaving messages that I need to call back "about an important business matter involving my account which cannot be ignored." If I don't call back, they never cease calling and leaving messages. I'm pretty rude every time I talk to them. Should I be?

Should I technically pay by the 1st? Am I just a complete ding dong, jerk, a-hole for waiting till the 7th of every month? Will this come back to haunt me somehow? The bank did reaffirm me: "There will be no late fee's or credit repercussions as long as you always by the 15th." When I said, I really don't care to treat Flag Star differently than my other banks, they freak out acting like I'm doing something really wrong. But, could never give me reason why I should pay by the 1st and won't specifically name any repercussions from my just continuing on the way I always have.

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    What does it state in your contract? If it was originated as a commercial loan, there's a good chance they wrote whatever they wanted to. A "uniform Fannie Mae/Freddie Mac instrument" would have boilerplate language supporting your business process. – user662852 Aug 17 '15 at 20:51
  • It is a Fannie/Freddie loan. I only buy warrantable rentals. – maplemale Aug 17 '15 at 20:53
  • There may be no late fees, but interest will accrue between the 1st and when you pay. – SeraM Aug 18 '15 at 20:44
  • Someone correct me if I'm wrong... But since mortgages aren't based on simple interest but rather amortized over the period of the loan, how could @phaedra comment be true? – maplemale Aug 18 '15 at 21:11
  • Oops, more research shows, I was wrong in most cases. Excerpt from washingtonpost.com/wp-dyn/content/article/2008/01/25/… "...there are two kinds of mortgages in the U.S. One accrues interest monthly, and it is simple interest. This mtg has no special name because most mortgages are of this type. The second kind of mortgage accrues interest daily and is always simple interest. This kind ought to be called a daily accrual mortgage to clearly distinguish it from the standard mortgage. But it isn't; it is called a simple-interest mortgage. – SeraM Aug 18 '15 at 21:34
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A quick Google search for FlagStar Bank shows that this is their standard practice. Quite a few people are complaining about the robo-calls they start receiving on the 5th of every month and FlagStar's response is usually something along the lines of "we're required to do so".

First and foremost, confirm the terms of your mortgage. Based on your story and information provided so far, it sounds like you're legally in the clear to pay as you have been.

It appears that they have an internal policy of firing off robo-caller on the 5th for anyone who hasn't paid their mortgage yet. With the number of individuals defaulting on loans over the past decade, this was probably a simple business decision to aid in reminding people to pay up.

Your 3.5 choices as I see it are:

  1. Pay before the 5th of the month
  2. Ignore the angry robo-calls and pay as you have been

2a. A variation of #2: set up a phone number just for that bank using a service like Google Voice and filter your calls so you don't have to deal with them on your primary line.

  1. Refinance with a different bank and confirm their policies ahead of time.
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    Most Smartphones or VOIP (as in any phone service the cable TV provider offers) have a feature to block a number. If someone were calling me every 5th of the month like this, I'd just block the call. – JoeTaxpayer Aug 18 '15 at 0:12
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    I think I'm actually going to take this route. I plan on getting another 5 rentals over the next 4 - 5 years. I'm not doing something special for one bank. Only thing is, it makes me nervous because what if something really was wrong with my account and a payment wasn't going thru? – maplemale Aug 18 '15 at 15:41
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    Typically, robo-calls will originate from a different phone number than real calls. However, using the VOIP option will allow you to check in on it at your convenience rather than whenever your cell/home phone ring. Most VOIP options also have voicemail transcript included. I use Google Voice as my junk phone for car dealerships, Craigslist transactions, etc. It emails me a transcript of the voicemail, which allows me to quickly see if it's a call worth dealing with. – BobbyScon Aug 18 '15 at 15:47
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They call you because that is their business rules. They want their money, so their system calls you starting on the 5th.

Now you have to decide what you should do to stop this. The most obvious is to move the payment date to before the 5th. Yes that does put you at risk if the tenant is late. But since it is only one of the 4 properties you own, it shouldn't be that big of a risk.

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One option is to try to get a month ahead on your mortgage payments. Rather than using the current month's rent to pay the current month's mortgage payments, try to use the previous month's rent to pay the current month's mortgage payments. This should allow you to pay on time rather than late but not unacceptably late.

  • This would be my choice as well. – souser12345 Jul 19 at 11:00
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All standard mortgage promissory notes mandate payments are due on the first of every month; I can almost guarantee the note you signed has this provision. Most lenders offer a grace period of generally 15 days before they assess a late charge, but the payment IS late on the 2nd. People have become incorrectly accustomed to believe that the payment is due between the 1st and 15th.

If they are servicing your loan for another investor (FNMA, FHMLC, a private investor, etc.), they may have contractual requirements to begin collection activities by a certain date.

So they are within the rights you granted them. If these calls really bug you, you can start to adjust your cashflow so you can perhaps make your payment a few days ahead of the first each month.

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