wells fargo telling me that one day is the same as 30 days late

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wells fargo telling me that one day is the same as 30 days late

Rachael Collins
Investor · Frazier Park, CA · Member since 2014 · 70 posts · 14 votes

I am working on a  refi for my primary residence. It's a rural property (20acres) and we bought it with private money. In providing mortgage payment verification to Wells Fargo they are telling me that checks dated one day after the due date is considered the same as 30 days late. The payment is due on the 26th,  so I wondered if the few checks dated the first or second of the next month made them think it was thirty days based on a due date of the first of the previous month.  However, as indicated above they said one day is the same as 30 days late.  Is this normal, or legal? I know loan requirements are strict, but this seems excessive.  Thanks-

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Jeff Dulla
Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
9y

@Rachael Collins - I am not qualified to answer this question from a legality standpoint but if you do read over the typical mortgage - it does tell you that payments are due on the due date and that any days beyond that, you can be considered in default on the loan. The typical 15 day grace period is allowed because lenders do not want to default on people and enough lenders have adopted that grace period where it has become commonplace. But this is not the first time I have heard of this at all and we as a mortgage lender have been making it a point for years to tell people that your payment is actually do on the due date. 

I wish you good luck with this and hopefully I am completely wrong and they are misinterpreting your payments as 30 days late. 

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  • Jeff Dulla
    Lender · Western Springs, IL · Member since 2015 · 472 posts · 245 votes
    9y

    @Rachael Collins - I am not qualified to answer this question from a legality standpoint but if you do read over the typical mortgage - it does tell you that payments are due on the due date and that any days beyond that, you can be considered in default on the loan. The typical 15 day grace period is allowed because lenders do not want to default on people and enough lenders have adopted that grace period where it has become commonplace. But this is not the first time I have heard of this at all and we as a mortgage lender have been making it a point for years to tell people that your payment is actually do on the due date. 

    I wish you good luck with this and hopefully I am completely wrong and they are misinterpreting your payments as 30 days late. 

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  • Chris MasonPro Member
    Moderator
    Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
    9y

    Hi @Rachael Collins,

    Never heard of this. I smell a typical big bank overlay. Yes, overlays (including secret ones) are legal.

    1Reply
  • Shaun Weekes
    Loan Officer / Processor / Life & Health Agent · Rancho Cucamonga, CA · Member since 2014 · 1k+ posts · 757 votes
    9y
    Originally posted by @Rachael Collins:

    I am working on a  refi for my primary residence. It's a rural property (20acres) and we bought it with private money. In providing mortgage payment verification to Wells Fargo they are telling me that checks dated one day after the due date is considered the same as 30 days late. The payment is due on the 26th,  so I wondered if the few checks dated the first or second of the next month made them think it was thirty days based on a due date of the first of the previous month.  However, as indicated above they said one day is the same as 30 days late.  Is this normal, or legal? I know loan requirements are strict, but this seems excessive.  Thanks-

     1 day late isn't considered a 30 day late at all.  What you need to do is have WF order a payoff from the current lender and they will verify that you don't have any 30 day lates.

    That is a big red flag in my opinion.  I know WF isn't that good in general but wow this is nuts.

    In mortgage terms you can be charge a late fee but for purposes of fico scores 30 day lates is the standard.

    I hope this helps and have a great day.

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  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    9y

    I've never heard of this either in regards to 1 day late being 30 days late.  What I've always understood is that lates are not reported on your credit report until a payment is 30 days late.  You could be charged a late fee without it being reported as late on your credit.   Then again this is for large lenders that report to the credit bureaus, not private lenders.

    It's also quite unusual to have a mortgage payment due in the middle of the month, not the first of the month.

    Regardless, how can they say you were 30 days late when you weren't.  It's simply not true.

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    Stephanie Medellin, Loan Factory58 Reviews
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  • Derek Carroll
    Syndicator and Fund Manager · Victor, NY · Member since 2012 · 760 posts · 345 votes
    9y
    Rachael Collins so you paid your private lender late by a few days and new lender is questioning approving you because you missed the date? Do you have a grace period in writing with the private lender? If show that to the new lender and see if that helps at all.
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  • Rachael Collins
    OP
    Investor · Frazier Park, CA · Member since 2014 · 70 posts · 14 votes
    9y

    @Chris Mason Thanks for that tip!!  I am not familiar with overlays - I will check out your link to get more info. Lending has so many facets.

    @Shaun Weekes - Great advice- I will look into having WF order a payoff to verify our timely payments.

    @Stephanie Medellin - I am not sure how they are interpreting the payment due date. We had the title company create the promissory note and they put the date of closing as the due date on the loan. It closed on the 26th, so that's what they input. I guess this is a lesson for me - first of the month should always be the due date so as to keep in line with the rules of conventional lending. I said the same thing - how can you say I was 30 days late when I was not. The loan officer simply said "that is how they are going to interpret it" - crazy!

    @Derek Carroll Yes, that's exactly what they are doing - questioning approval because we missed the date. I will check to see if there is a written grace period with our private lender. Thank you!!

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  • Rachael Collins
    OP
    Investor · Frazier Park, CA · Member since 2014 · 70 posts · 14 votes
    9y

    @Chris Mason Wow! I just checked out your link to overlays - no joke - I guess they can really do whatever they want to try and make sure the loan will be repaid. You have responded previously to my inquiries regarding this property and I really appreciate it.  We certainly have our hands full with a refi on this type of property.  Thanks again!!

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  • Derek Carroll
    Syndicator and Fund Manager · Victor, NY · Member since 2012 · 760 posts · 345 votes
    9y

    it sounds like they aren't talking about actual FICO reporting purposes but generically stating 1 day late is as bad as 30, or they might as well say its as bad as 180.  I think they are generally stating they don't like to see late payments and that pattern is one that they don't want to approve. sounds like a simple subjective review.  Id ask them to have a head underwriter review or have a different processor comment because although I'm not a residential lender I'd venture to guess that the actual guidelines state what is based on the credit report.

    it could however be an overlay that they are doing right now just being more conservative.  

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  • Stephanie MedellinBusiness Member
    Mortgage Broker · CA · Member since 2014 · 1k+ posts · 642 votes
    9y

    I would absolutely fight that.  Most loans do have 15 day grace periods before a late fee is even assessed.  That would be in your loan documents.  (Of course a private loan will likely have different terms, but Wells Fargo should be used to standard terms for conventional loans.) If a refinance is expected to close toward the beginning or middle of the month it's not uncommon to just skip that months payment and have it included in the payoff.  It does not affect the new loan approval to have that additional interest and even the late fee show on the payoff statement.  Guidelines are typically no 0x30 payments.  I still don't see how you can turn 5 days into 30!  I'm just curious, is this loan reported on your credit report?

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    Stephanie Medellin, Loan Factory58 Reviews
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