October 27, 2015
What happens if a borrower misses the deadline for his or her FHA mortgage loan payments? While it’s true that no borrower goes into a home loan planning to have missed or late payments, knowing what happens when the payment is late or missed can be a big help–taking the mystery out of these issues is important, especially for new borrowers.
FHA loan rules for late payments are found in HUD 4000.1 Part Three Section A. There, you’ll find a section titled “Late Charges” which begins by defining what the FHA views as a late payment:
“Late Charges are charges assessed if a Mortgage Payment is received more than 15 Daysafter the due date.”
Furthermore, FHA loan rules in this section state, “The Mortgagee may consider a Borrowers payment late if the payment is received by the Mortgagee more than 15 Days after the due date.”
The lender is permitted to begin assessing 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 charge amounts:
“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.”
“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.”
What is the lender’s responsibility when it comes to notifying the borrower? 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:
“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).”
Do you work in residential real estate? You should know about the free tool offered by FHA.com, designed especially for real estate websites. It’s a widget that displays FHA loan limits for the counties serviced by those websites.
It is simple to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
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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