Dear Dr. Don,
I am making weekly mortgage payments, and I'm making the payments on time. Strangely, my mortgage company is holding my money, applying it once monthly and charging me late fees. That's despite the fact they have my money prior to the payment due date. Aren't they required to post payments as they are received? I don't want to be wrongly charged.
-- Mike Mortgage
I certainly can understand your frustration. From what I'm seeing here, I don't think you've done anything wrong.
When you convert your mortgage to biweekly or weekly mortgage payments, you haven't changed the underlying mortgage, you've just overlaid a new payment structure onto the old mortgage. Mortgage loans aren't originated with weekly or biweekly payments, but with monthly payments.
Normal vs. not-so-normal
It would be normal for the weekly payments to aggregate in an account and be applied monthly to the outstanding loan. What is odd is to go through all that and have your monthly mortgage payment paid late.
One major national lender says in its discussion about more frequent payment options: "Partial payment will not be applied to your mortgage until full payment is received. Partial payment is any amount less than the current monthly payment listed on your billing statement."
Your action plan
The loan servicer isn't receiving timely payments from the administrator, and that's why you're being charged a late fee. Work with your weekly mortgage plan administrator to determine the cause of the late payments and find a way to ensure that they do not occur in the future. The payment plan should be designed so there are no late payments. Something isn't right, and if it turns out to be the administrator's fault, they need to make it right.