Bottleneck in processing mortgage payments


At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

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

Dear Mike,
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.

Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.

Ask the adviser

To ask a question of Dr. Don, go to the “Ask the Experts” page and select one of these topics: “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.

Bankrate’s content, including the guidance of its advice-and-expert columns and this website, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this website is governed by Bankrate’s Terms of Use.