Private money borrower always pays interest payment late

[Frank Y.]

Hi, I have a private money borrower who always pay interest payment late. Every month I have to email her and text message her about the payment. She is always late. Another thing bothers me is that the home owner Insurance has been canceled three times due to her “no payment”. One of her checks was returned due to no sufficient fund at her account. What shall I do with this borrower? Can I foreclose her? Any suggestions will be appreciated. Thanks.

[Andrew Michael]

@Frank Y.

Once you let it get to this point it becomes difficult to "re-train" the borrower.  What do your loan docs/ agreement say about late payments, grace periods and penalties?  The late payments are one thing but having equity at stake in an uninsured property would scare me.

If she is consistently late but is in fact paying and progress is being made on the project I would enforce the penalties monthly or on the payoff.  If it looks like she is heading in the wrong direction altogether and your equity is at risk then I would see about taking the property back.