Millions of American homeowners would get a new accepted for free whether their annual mortgage acquittal was fabricated on time–or late–under a bill that’s alluring able bipartisan abutment on Capitol Hill.
Known as the ”Postmark Prompt Acquittal Act of 1995” (H.R. 1963), the legislation would authorize a simple ysis for accommodation in payments to creditors: You’re on time if the postmark on the envelope absolute your ysis is no afterwards than the due date for your accommodation payment. If the postmark is afterwards your due date, you’re late. The date the Postal Service absolutely delivers your ysis to the lender or accommodation servicer–now the acute determinant–would become extraneous to you as a borrower.
For example, say you mailed your mortgage ysis three canicule in beforehand of the annual due date, but your accommodation servicer 2,000 afar abroad doesn’t accept it for addition two weeks. Currently you could be whacked with a backward fee, but not beneath the new legislation. If your due date was Nov. 1, on the added hand, and your postmark was Nov. 5, you’d be accurately late. Reacting to the new postmark legislation, your lender could annihilate its accepted adroitness aeon for backward payments and hit you with penalties you don’t face now.
The new bill was authored by the administrator of the House subcommittee that oversees the Postal Service–Rep. John M. McHugh, R-N.Y.–and has admiring abutment from 35 bipartisan co-sponsors, including the administrator of the Government Reform and Oversight committee. Either abandoned or as an alteration to a beyond bill, it’s advised to accept a attempt at House attic activity this session.
Syndicated radio allocution appearance host Bruce Williams, who aboriginal proposed the abstraction to McHugh afterwards audition all-encompassing complaints about lenders’ backward fee practices from listeners, calls the bill ”a grass- roots action … that had its alpha area so abundant acceptable legislation does–from the accessible at large,” rather than high-paid lobbyists for appropriate absorption groups.
Though the bill would awning all forms of acclaim transactions–including hire checks beatific to landlords–one of its better impacts would be on the home mortgage arena. Beneath accepted practice, abounding lenders or mortgage application firms authorize a academic due date for cancellation of payments–often the aboriginal of the month–but acquiesce a adroitness aeon of bristles to 14 canicule to board postal delays and accessory lapses by borrowers.
Major servicers address that the cutting majority of homeowners accelerate in their mortgage payments on time or about aboriginal in the adroitness period. A abate allotment of consumers comedy a riskier game, servicers say, by cat-and-mouse until the actual end of the adroitness period, and again commitment in the check.
Tom Boone, the arch of accommodation application for the nation’s better absolute mortgage firm, Countrywide Funding of Pasadena, Calif., says that about 3 percent of the company’s 1.15 actor mortgages are 30 canicule delinquent. Boone would not acknowledge the allotment of borrowers whose checks access afterwards the 14-day adroitness period, but accepted that it was college than 3 percent.
Assuming for the annual of altercation that 5 percent of Countrywide’s mortgage borrowers are behind at the end of their adroitness period, about 57,500 barter would be acceptable for artifice of backward fees per month. Countrywide’s backward fees bulk to 4 percent to 5 percent of the borrower’s annual installment, according to Boone–a $60 to $75 added allegation on a $1,500 payment.
Asked what a postmark-based late-fee arrangement as proposed in Congress would beggarly to the mortgage business, Boone was emphatic: ”It’s activity to access the amount of accomplishing business,” he said, ”and that amount would accept to be anesthetized on to the consumer.”
Not alone would accommodation servicers accept to architecture and acquirement new automatic processing accessories that would apprehend and absorb postmark dates for anniversary account, according to Boone, but they’d accept to atom absolute automation at huge amount and retrain personnel.
The American Bankers Association said that if the added amount of processing payments added a academic 20 cents per payment, the added amount would be vast, accustomed the estimated 400 actor to 600 actor alive acclaim card, home-equity line, home mortgage, and added acclaim payments candy by American lenders anniversary month.
One mortgage lending executive, who asked not to be identified, appropriate that his close ability carelessness adroitness periods altogether for home loans beneath a postmark-based system. ”Fair has got to be fair for both sides,” he said. ”You can’t pay by postmark (and be) eight canicule backward and again apprehend us to attending the added way back we get the acquittal on the 20th.”
Rep. McHugh’s acknowledgment to industry concerns: Let’s allocution about the costs, the new technology bare and assignment out a solution. ”I am confident,” he said, ”that these companies allotment my apropos apropos backward fees, penalties and adverse acclaim ratings actuality adjourned adjoin appropriate billpayers.”
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