Can my lender report my mortgage payments so late when I am on loan?



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Dear reliable money coach,

I had a mortgage reprieve from my lender. I sold the house and paid the full amount. But now they noted that I was late all these months. Can they do it after the fact? – Richard, Georgia

Hi, Richard. Tolerance means that the lender – in this case, your mortgage company – agrees to suspend or reduce your monthly payments for a specified number of months.

When your mortgage is on hold, you still have to pay, and interest usually continues to accrue on your unpaid loan balance. Even though your mortgage lender agreed to allow you to suspend payments as per your original agreement, he was still technically late.

If you do not pay the obligation exactly as agreed with the lender, they may report any late or missed payments to credit reporting agencies (such as Equifax, Experian, and TransUnion). This is why giving up a mortgage is usually a bad mark on your credit reports, which negatively affects your credit ratings. But there are exceptions.

If the federal government guarantees your mortgage and you get a grace period due to COVID-19, your lender should not report the suspended payments to the credit bureaus. If they do, be sure to contact the credit agencies and submit a dispute… Then check your reports to make sure malicious information has been removed from your credit reports.

If the government does not support your mortgage, you will not have the flexibility to prevent suspended payments on your loan. Check your abstinence agreement to find out how your lender will report your missed or reduced loan payments. You are probably out of luck if it says suspended payments are reported late.

However, many lenders have made concessions due to the pandemic. It doesn’t hurt to talk to your lender and ask them to remove the negative item from your credit report.

Need Credible® advice on money-related matters? Send an email to our trusted finance coaches at… Money Coach can answer your question in the next column.

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About the author:

Laura Adams is a personal finance and small business expert, award-winning author and host Money Girl, the top-rated weekly audio podcast and blog. She is often quoted in the national media, and millions of readers and listeners benefit from her practical financial advice. Laura’s mission is to empower consumers to live richer lives through her speeches, representatives and advocacy. She received her MBA from the University of Florida and lives in Vero Beach, Florida. Follow her on, Instagram, Facebook, Twitter, and LinkedIn


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