January 31, 2022
What happens if you miss your monthly deadline for FHA mortgage loan payments? Nobody serious about home loan planning goes into the process expecting to have missed or late payments down the line.
After all, a missed payment can lead to serious issues with the mortgage if you aren’t proactive enough to deal with them right away. Life can and often does get in the way of our financial obligations.
With that in mind, what should you know about missing an FHA home loan payment? To start, there are rules that codify in part how the lender is to proceed. These FHA loan rules for late payments are found in HUD 4000.1
A section in that volume titled “Late Charges” explains what the FHA views as a late payment on the FHA loan. According to HUD 4000.1:
“Late Charges are charges assessed if a Mortgage Payment is received more than 15 days after the due date.”
And the lender is allowed to start issuing mortgage loan late charges on the 17th day of the month of the late payment. However, the timing of your loan may play an important part in late charges and how much they might cost.
One update to the FHA loan rules in this area included a specific date requirement for certain limits to late fees.
HUD 4000.1 states, “For Mortgages assigned a case number on or after March 14, 2016, the Mortgagee may assess a Late Charge, not to exceed 4 percent of the overdue payment of Principal and Interest (P&I) and in accordance with applicable law.”
But what about for those who have an FHA loan with an FHA case number prior to that March 14, 2016 date? FHA loan rules address that, too:
“For Mortgages assigned a case number before March 14, 2016, the Mortgagee may assess a Late Charge calculated based on overdue PITI if permitted under the terms of the mortgage Note and under applicable law.”
Is your lender required to do any due diligence in notifying you in such cases?
Before collecting a late, fee the lender is obliged by FHA loan rules to notify the borrower with “advance written notice” of the late fee to meet the following requirements.
“The Mortgagee must include in the advance notice the following information:
–the due date of the payment;
–the amount of the regular monthly payment;
–the date on which the Late Charge will be imposed; and
–the amount of the Late Charge (or the full amount now due which consists of the regular monthly payment plus the Late Charge amount).”
Ask your loan officer if there are any lender-specific additional issues you should know associated with late payments. Notice that we are not addressing MISSED payments–that is a subject for another article.
Bruce Reichstein has spent over three decades as an experienced FHA and VA home loan mortgage banker and underwriter where he was responsible for funding “Billions” in government backed mortgage loans. He is the Managing Editor for FHANewsblog.com where he educates homeowners on the specific guidelines for obtaining FHA guaranteed home loans.
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