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  1. #1
    Join Date
    Jan 2010

    Default When is a Mortgage Payment Considered to be Late

    I sold a home in North Carolina and financed the sale. The buyers put $19k down on the purchase price of $87,900. They payments were to be $500/month for the first year (increasing thereafter) with the balance due after 5 years. They wanted to make the payments bi-weekly because that's how they got paid. My attorney set it up so the payments were due on the 15th and last day of each month with a 10-day grace period. The buyers wanted to transfer the funds directly to my bank account, so I provided my bank's routing number and my account number.

    The closing was July 1. The first payment was due July 15. As of July 27, the funds still were not in my account, so I sent them a letter. The buyer called me on July 29 and said there was a delay in setting up the automatic payments, so they mailed a money order. She said something like, "You can check the date of the postmark and see it wasn't late."

    I received the money order for the July 15 payment on August 1 and it was dated July 25 (the last day of the 10-day grace period). I wasn't happy, but I thought it may take a while to get the payments set up, so I let it go.

    The second payment was due July 31. On August 10, the woman called my partner and left a message asking him to have me call her. (She has my number.) By the time I got the message and called her, it was after 8pm and she was at work. She told me the automatic payments could not be set up, but her husband had the money and I could go to the house and pick it up that night. (The last day of the grace period.) I told her I was in for the night and asked her when she'd be available the following day. She didn't know and said she'd call me the next day. That was 4 days ago and I haven't heard from her since.

    So, my questions are...

    Is a payment considered "on time" if it's mailed by the last day of the grace period? (As she seemed to indicate this with her first payment.) I included the grace period to allow for postal or unforeseen delays, but they've taken it to the last day each time.

    What obligations to I have to "pick up" the payment? I can't imagine her calling a bank on the last day of a grace period and telling them to have someone come and pick up their mortgage payment. But I think her intent was to have "offered" the payment on the last day of the grace period (thereby avoiding the late fee and being in default).

    I'm composing another letter, since the second payment will be 15 days late tomorrow and the 3rd payment is due tomorrow. But I'm not sure of my legal rights. Is the second payment late even though she gave me the chance to pick it up on 8/10?

    I'm also wondering if a payment is late if it's not in my hands by the end of the 10-day grace period even if it's mailed/postmarked during that time? And is she responsible for late fees and in default if a payment should get lost in the mail?

    I'm going to suggest that she mail the payments if she's unable to set up the automatic payments, but I'm looking for other options.

    I want to be fair and I'm not looking to foreclose, but I have my own bills to pay. As you can probably tell, I'm new at this. I sold/financed one other property and the people were wonderful. They paid on time and even paid it off early. So this is a new experience for me.

    Any advice would be greatly appreciated.

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: When is a Mortgage Payment Considered to be Late

    A mortgage payment is considered to be late when, under the terms of the mortgage contract, it is late. If the mortgage contract permits payments by mailing and does not specify that payments are to be received by a specified date, the act of mailing a check on that date would normally be deemed timely. If your contract permits them to mail the payment and you prefer to pick up the payment to avoid any delay in the mail, you can propose that to the buyer.

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