Millennium Madness Could Mangle Mortgage Payments
What do mortgage companies use to track your monthly payments? A computer
software program, of course, one that's vulnerable to the Millennium Bug. Has
your mortgage company tackled the Y2K problem, or will your January mortgage
payment fall through the cracks on December 31, 1999? Remember that these
programs are very efficient at spitting out a late fee or delinquent notice
whenever your check isn't recorded in time. Will a Y2K snafu make a Deadbeat
out of you?
The Y2K problem is haunting the business world, and mortgage servicers are
not immune. It's good idea to prevent mistakes by your mortgage servicer
from tarring your credit record or causing a foreclosure proceeding.
Fortunately, there are things you can do to insulate yourself and your
mortgage payment from computer snafus.
The best insurance you can give yourself is to be an Early Bird--make your
January mortgage payment well ahead of December 31, 1999. In fact, mail in
your check on the first of December, to allow for normal delays by the Postal
Service brought on by the holidays. That will allow plenty of time for your
payment to be received and processed before any computer crashes occur. When
you receive proof of payment, save it! You might need it. There's another
advantage to making your payment earlier--you'll be able to add the payment
to your mortgage interest deduction for the 1999 tax-year.
If all else fails, you have the law on your side. Congress passed a
little-known provision in the Y2K Act (the Year 2000 Readiness and
Responsibility Act) designed to shield homeowners from mistakes and possible
foreclosures caused by unprocessed mortgage payments. It says: "No person
who transacts business on matters directly or indirectly affecting
residential mortgages shall cause or permit a foreclosure on any such
mortgage against a consumer as a result of an actual Y2K failure that results
in an inability to accurately or timely process any mortgage payment
In addition, the law says that if you sent your payment in on time, but your
mortgage company says you didn't, you have seven days to supply proof in
writing. A canceled check, money order receipt or some other written
documentation will qualify as proof. Your best bet is to send it by
certified, return receipt mail.
The law exempts loans that are in default or facing default before December
15, 1999, and complaints made after March 14, 2000 are not covered.