Bank removed autopayment and now claims I missed a payment

[TXSponger]

What is the name of your state? Texas

In April of this year, I went to my bank's website and was looking to find information regarding mortgage payment relief due to covid. As I was unemployed at the time, I was trying to determine what relief my bank was offering. The website had very limited information regarding covid relief but did have an online form to fill out at which point they would evaluate and contact me for what they could offer. A couple of weeks later, we get a letter in the mail stating that we qualified for mortgage relief and that the bank would defer payments for three months after which time the entire deferred amount would be due. The letter also said this was already implemented. Since the whole concept of deferring only to owe the entire lump sum really made no economic sense and is unhelpful, we immediately called the bank and asked why they automatically adjusted the mortgage without any notice and asked they go back to the original scheduled amortization...which they did over the phone. My mortgage lender is also the bank where I have my checking and savings accounts and payments have been on auto draft for about six years.

We just found out that when the bank adjusted the mortgage in April, they also took us off auto draft and unknown to us, they didn't process the May 1st payment. We have a ton of items that go through our accounts and we honestly didn't know the mortgage payment didn't go through. We don't typically open our mortgage statements since these payments just happen, and we really don't verify the timing every month. For the past six years.....there has never been an issue. Additionally, the auto payments did occur in June, July, and August. I just received an alert from a credit reporting agency that the lender reported me for a late payment and has also charged several months of late fees.

I have already escalated the issue with the bank.

Question: Can a lender alter a mortgage without my input? The online form contained no specifics around relief and I'm quite certain had no "opt in" or "approval" language. Further...can a lender also stop the autopayment function and then charge late fees when payment isn't executed? With all the documents you sign related to a mortgage....their should be some minimal level of formality when amending it. Is there any legal liability for the bank and how would one approach if there was?

I realize we would have noticed back in May had we decided to reconcile the mortgage statement for the first time in years...but given covid, the fact both my wife and I just lost our jobs, homeschooling kids, and all the chaos in the world at that time....we didn't think to look. I think I'm finally on the verge of employment and looking to refinance my mortgage....and having a recent "late payment" could be hugely costly in mortgage rates.

 

[adjusterjack]

Can a lender alter a mortgage without my input?

It can because it did. Besides you requested deferral, you got deferral, so why wouldn't auto pay be removed if you didn't have to pay.

.can a lender also stop the autopayment function and then charge late fees when payment isn't executed?

Again, it can because it did. Apparently when you cancelled the deferral the auto pay was restored, just not soon enough.

Is there any legal liability for the bank and how would one approach if there was?

Nope. Read your loan contract. There's a lot of fine print in there that probably absolves the bank of any liability.

We don't typically open our mortgage statements since these payments just happen, and we really don't verify the timing every month. For the past six years.....there has never been an issue.

There it is. That's the danger of auto payments. There's never an issue, until there is. And if you don't check your accounts every month (no excuses) then late item on your credit report is on you.

I hope that your bank is kind enough to fix things for you.

 

[TXSponger]

To be clear....I didn't request a deferral. I filled out an online request to see what relief was available.

I just rechecked the banks Covid Loan Assistance section of their website and it says specifically the following :"Please fill out the form below, and your request for payment relief will be evaluated by a loan specialist."

Then where you input your identifying information, it says: "I consent to being contacted regarding any debts I may owe to XXXX at this, or any other cellular or mobile telephone number I have provided to XXXX.". The first two questions are "Best time to call" and then asking for my time zone. I was reasonable expecting someone to reach out to me and discuss.

Nowhere on the bank's site does it define "relief" or does it suggest you are committing to anything. I'm not sure how they can legally adjust mortgage amortization based on an online info request. Just because they can do something doesn't mean it's legal. They have the ability to sweep $100K from my account....that doesn't make it legal.

 

[LdiJ]

It can because it did. Besides you requested deferral, you got deferral, so why wouldn't auto pay be removed if you didn't have to pay.



Again, it can because it did. Apparently when you cancelled the deferral the auto pay was restored, just not soon enough.



Nope. Read your loan contract. There's a lot of fine print in there that probably absolves the bank of any liability.



There it is. That's the danger of auto payments. There's never an issue, until there is. And if you don't check your accounts every month (no excuses) then late item on your credit report is on you.

I hope that your bank is kind enough to fix things for you.

That is one danger, the other danger is that paychecks don't come in (for most people) on the same specific date each month so if you have anything bigger than say 50.00 on autopay there is the risk that the money won't come in by the autopay date. It is much better to be in control of when your bills are paid.

 

[Zigner]

Is the "late payment" showing up on your credit report? Did you make the payment the absolute moment you realized what happened? If your answer to both is yes, then I would escalate this at the bank until they request deletion of the

To be clear....I didn't request a deferral. I filled out an online request to see what relief was available.

I just rechecked the banks Covid Loan Assistance section of their website and it says specifically the following :"Please fill out the form below, and your request for payment relief will be evaluated by a loan specialist."

Then where you input your identifying information, it says: "I consent to being contacted regarding any debts I may owe to XXXX at this, or any other cellular or mobile telephone number I have provided to XXXX.". The first two questions are "Best time to call" and then asking for my time zone. I was reasonable expecting someone to reach out to me and discuss.

Nowhere on the bank's site does it define "relief" or does it suggest you are committing to anything. I'm not sure how they can legally adjust mortgage amortization based on an online info request. Just because they can do something doesn't mean it's legal. They have the ability to sweep $100K from my account....that doesn't make it legal.

You are going to want to refer to the terms & conditions for the automatic payment arrangement you made. It likely absolves them of any liability...

 

[adjusterjack]

.I didn't request a deferral. I filled out an online request to see what relief was available.

I seriously doubt that the bank had two online forms, one to request deferral and another to "see what relief was available." I think you applied for deferral and was granted it without the bank having to contact you for anything. In other words, streamlined your request along with thousands of others.

Your assumption that somebody would have to contact you for something was apparently erroneous as was your neglect to check your account statement each month.

Quit blaming the bank. The people at the bank did nothing wrong to you.