I have a new mortgage, which was sold to a new Servicer, Citizens One Home Loans. The Servicer does not accept partial payments. I get paid bi-weekly, and would prefer to make bi-weekly payments and get an extra payment in each month. Do I have any options?
Has anyone run into a situation like this before? Is there a way to force the servicer to sell my mortgage to someone else who has more consumer friendly policies?
Per the closing documents, they are not permitted.
I’ve had 3 prior mortgages, all of them would accept partial payments. I think if I could force the sale of the mortgage, I would have a decent chance of getting a servicer that did accept partial payments.
The benefit of making 26 half payment instead of 12 full payments comes from the extra payment. The effect of the timing is negligible - prepaying $1k 14 days early is going to save you less than 2 bucks interest, or around $700 over the full 30 year mortgage term (and actually much less, since you’ll be making extra payments).
Just pay your monthly payment, and send them an extra principle payment every few months. It really isnt worth worrying about.
I think most servicers will tell you that they don’t accept partial payment, but the reality may be slightly different, and you just have to figure out the rules. Example: my payment is due on the 1st of the month, but there’s a ~2-week grace period during which the payment is not considered late. With all the servicers I’ve had, a partial payment before the due date is applied towards the principal balance immediately. but a partial payment during the grace period gets put on hold until the rest of the payment is received, and then the full payment is applied towards interest and principal. I think if they truly don’t want partial payments, they may send you a warning letter, but I don’t know what happens if you ignore it. Maybe they have a way to reject or instantly refund partial payments? This could be tricky if payments are pushed by ACH.
I don’t know about most servicers, but I know that is Chase’s behavior by default. However you can call them up and tell them to change it so that partial payments always just sit there until enough funds arrive to make a full payment, regardless of whether it is before or after the due date.
Are you sure you’ll pay less interest when paying early? Usually it doesn’t matter when the payment is made as all payments are tallied up after the grace period ends. For example, a payment might be due on 1st, but not considered late until the 10th. So anything that’s being paid between the 11th of the current month and the 10th of the next month will be handled the same for interest purposes.