Hi. I’ve got a situation sending in mortgage payments to my bank. For accounting purposes, my girlfriend and I (who own a house together) each send them half the payment every month. Lately, the bank has started complaining about partial payments. I’ve explained that they are not partial payments, they are full payments written on multiple checks, but that the total represents 100% of the mortgage amount due.
As far as I see it, a partial payment is sending $500 when you owe $1,000. Two $500 payments is a full payment. They disagree. I think they’re morons.
So, if it went to court (it won’t, but I’d like to make my case from a solid position, not conjecture), how would the court rule it? That is, if the bank tried making me pay fees for lack of payments, and I was able to show the judge that we had sent full payments each month in multiple checks that they just didn’t want to accept and that was their problem for not cashing them, not ours – how would the judge likely rule?
Not asking for an official legal opinion here, but trying to gague how far I can push this matter.
I am sure that you would do just fine in court. Are you sending these checks in the same envelope? If so, I am guessing that it might be an issue with the system that they enter the payment into. A data entry person may have to enter each check seperately and it flags as a partial payment on the first one. It may even generate an exception report or something based on that. That is a really crappy system if that is the case but I have seen systems designed with such flaws.
Can’t you just make your own life easier by complying? She can pay you or you can pay her and then one of you can write a single check. If you don’t want a full joint account with her, you could still open a free one with this as the only purpose.
No, not sending in the same envelope. In fact, she sends them snail mail, I send the payments electronically. They all get there, that much we know.
Can’t really simplify or take turns paying because we are both freelancers, and it makes our lives MUCH easier to have a steady payment of half the mortgage each month. I figure as long as the bank gets the full payment, they can input two sets of #s. It also makes my accounting much easier (as opposed to having to figure out why I’m getting large monthly payments from someone not legally related to me, which becomes another situation to detail to the IRS…)
I think that is the source of your problem right there. Banks usually don’t have a problem accepting multiple checks as payment in the same envelope but it looks like yours probably are not even getting there on the same day. That will cause red flags to pop up in the system because the first one is a partial payment. It sounds like you need to write stop the electronic transfer and just send your check in the same envelope with her. That will make everyone’s life easier.
Look at your servicing agreement or other paperwork to see if there’s a clause about how payment has to be recieved. They may specify how payment is to be received, and if so, and you’re not meeting it, then you could be subject to some processing fees. But you should not be legally subject to any fees related to lack of payment or partial payment. Especially if you can show that your full amount is being credited to your account every month.
BUT, mortgage processing systems are complicated cluster-f@%#s, and no matter how many people you talk to to clear the matter up, if the system is flagging you, it’s going to keep flagging you.
You and your girlfriend buying a house together seems like the hard part.
Figuring a way to coordinate your payments seems easy in comparison.
Also you have to keep your mortgage payment info for the IRS anyway–I can’t imagine that you’d not be able to easily explain to any nosey auditors the situation with checks from the girlfriend with the documentation you should already be keeping anyway.
If you just want an easy life and damn the principle, you could do what we do, which is have our own bank accounts as well as a joint account solely for the mortgage. We pay half the mortgage each into the joint account, and there is a direct debit from the mortgage company that then extracts full payment from the account once a month.
Sorry, I explained that above. Trying to keep accting lines clean as a whistle.
OK, I hate to do this to you nice folks, but I’m now going to go into more detail than you should have to sit through. The girlfriend and house situation is easily fixed compared to the 2nd (but same problem) situation, where we bought an investment property – my girlfriend and I – along with my parents. So once again, it’s multiple check time, only this time from us and from my folks, who live 3,000 miles away so we can’t bank together (national chains be damned, interstate banking still isn’t really legal nor easy), much less send checks in the same envelope.
I was just trying to simplify the situation and focus on the overall problem, not the details. Hence I’m trying to find out if multiple checks at different times constitute partial payments or full payments in multiple checks.
Anyway, Flipshod, will have to do your obvious point (not as obvious to me, apparently) and read the stacks of paperwork we signed :eek: to see what it says.
One thing to we need to know is exactly what kinds of problems you seem to be encountering from the bank. I can easily see how a partial electronic payment would trigger a nasty letter or a call from a rep because these things are largely automated. However, I also would guess that as long as all the payments from the parties involved made it in by the due date, that the bank couldn’t do anything or hold it against you. I would just call the bank an ask them the details about how this would work. I am quite sure that there would not be any legal problems or even any bank fees if full payment was received by the due date.
2)You write some checks to the bank with advance dates, hand them over to your girl friend to mail the right one when she does.
3)Talk to your bank to see what happens if you pay one month in advance. It could be this would allow you to still make 1/2 payments separately, their might still consider them partial, but no letters or late charges.
4)Each of you make a full payment each time. That will make your lives a whole lot simplier a whole lot sooner.
Good ideas overall, but I just spoke with the bank. Basically their computer system doesn’t know what to do with anything but full payments, so the funds get set aside til someone manually moves them to the right place, and they say it’s a lot of work and has the potential for mistakes.
I told them I wasn’t trying to give them extra work, but if they had to do it too bad, becuse they are making lots of money off this and I don’t have any problem with people (or institutions) having to work a little harder for juicy profits. I don’t think they liked that. I didn’t care. grin
That twice/month payment idea is a good one we hadn’t considered. Otherwise it may be the “make a new joint acct, send the funds there, have them deduct them automatically” option. Bah.
You’re right about the bank, it’s their problem and they should deal with it. However, you can avoid headaches. I really doubt the IRS is going to come after you for getting a check from your girlfriend to pay the mortgage. If you are worried about that, then why can’t you write her a check so she can send in full payment?
A good piece of advice I received quite some time ago is “choose your fights carefully.” Life is too short to annoy others for small or no benefit.
I suggest you schedule an appointment with a manager-level person in the bank. Explain the problem. Tell him/her that you have no desire to cause extra problems for the bank, but you also wish to have things work smoothly on your end. Say “We’re reasonably happy with the current scheme of multiple payments, but perhaps you, as the money expert, can suggest a plan that works well for everyone.”