Why would a mortgage company not accept a payment?

After missing 2 mortgage payments because of a change in my financial situation, I spoke with a rep from my mortgage company who told me that as soon as I made apayment last month I would be okay. However when I called on the 28th they would not accept my payment. They claimed that it ws too late and my loan would change to threat of foreclosure. Why would they not accept my payment when it was not the last day of the month?

Asked on December 1, 2011 under Real Estate Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Once you are in default on a loan, a lender is no longer obligated to accept payments from you--and indeed, if they want to take action (e.g. foreclose) against you, they may need to refuse payments.

That said, if you were making up the whole arrears--that is, you said you have missed two payments; so if you were making up those as well as making the new payment--they should have accepted it. But if you did not make up earlier balances or payments due, you are still in arrears and they may still foreclose, even if  you try to make a current payment (you need to clean up the past due amount as well as staying current). In that case, they may choose to refuse the new payment, so you can't try to claim, as a defense to foreclosure, that the fact that they accepted the new payment showed that they waived (or gave up on) the prior amounts due. And since you'd be in default if you did not pay the prior balances, they are within their rights to proceed directly to taking legal action against you.

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