When is a Late Mortgage Payment Reported on your Credit
What happens when is a Late Mortgage Payment Reported on your Credit and what happens to the loan if. The payment of an installment of the loan is delayed (or not paid at all)? This is the main fear of every family that takes out a mortgage to buy a house .
On closer inspection, the same concern also concerns the bank, which must avoid granting loans as much as possible to subjects unable to sustain the amortization plan .
This happened to an extent never recorded in the past after the economic crisis that broke out in 2008.
Despite the credit rating procedures of the institutions. The request for guarantees and the diligence of the borrowers. Various situations can occur over the long life of the loan
(which can usually reach 30 years, but for the youngest even beyond) timely compliance with deadlines.
The consequences of a missed installment are not always the same
From the most serious, such as job loss or expenses. To deal with particularly serious health situations not covered by the health service. To the most unpredictable ones, such as. The sudden need to replace your car, non-postponable dental care or a tax assessment .
It should be noted that the law provides for forms of protection for borrowers. With the aim of avoiding disproportionate consequences for minimal defaults.
Over the years there have also been agreements between ABI and consumer associations. The suspension of mortgages in the event of economic difficulty.
The worst scenarios for those who do not respect the amortization plan established in the loan agreement. In fact, are the reporting to the credit information system ( Sic ) as a bad payer and, in the most extreme cases. The expropriation of the house with subsequent sale to the auction by the bank.
In reality, these outcomes represent only the tip of the iceberg. The final stage of a procedure that is usually reached only following overt and repeated failures ,
as well as the bank’s multiple attempts to find an alternative way out. It should not be forgotten, in fact, that the foreclosure procedure is a considerable “effort” for credit institutions , with long lead times,
high costs and the risk that the sale will not be successful (or at least not for the desired price. ).
Late Mortgage Payment Reported on your Credit. What are the consequences?
Therefore, even for the most difficult situations, banks tend to always be willing to seek a solution that allows the “performing” remission of borrowers, for example by identifying a specific repayment plan or extending repayment times .
Pursuant to Article 40 of the Consolidated Law on Banking, payments are considered delayed when they occur on a date between 30 and 180 days from the original due date.
After seven late installments, even if not consecutive, the bank has the right to terminate the loan agreement, requesting immediate repayment of the debt (and if anything, proceed with the attachment if this is not paid).
Same thing if the delay exceeds 180 days. All the contractual clauses that give the bank the right to unilaterally withdraw from the contract with terms shorter than those set by the TUB regulations are void .
In any case, the default interest established in the contract must be paid for each late payment (usually this is the agreed interest rate plus a spread of 3-4 percentage points).
Interest on arrears
The interest on arrears must be calculated based on the days of actual delay. From the due date of the installment to the day on which the payment is made, multiplying them by the annual rate and then dividing by 365.
Some banks establish ancillary costs in case of delay, as occurs, for example, also in cases of overrun of the credit line or of unauthorized “reds” on the current account.
Even with regard to reporting to the SIC, borrowers can be relatively “serene”: in the event of a delay of a few days. There are no immediate risks.
The bank is obliged to send a notice in which it informs the customer. That it will proceed with the report if the debt is not promptly remedied.
If the borrower defines the position, then no reporting will take place (which, as known, can cause great difficulties in the future to obtain a loan, an overdraft or even just a credit card).
It remains understood that, in any case, the best thing to do if you already know in advance. That you will not be able to pay the installment on time is to contact the bank immediately.
Often this does not happen because those who find themselves in difficulty are afraid. Or in any case feel a sense of psychological discomfort, to make the situation known.
However, this means that sometimes solvable situations consolidate, worsening to the point of becoming problematic. The lender has a vested interest in ensuring that mortgage repayment plans proceed smoothly. So where possible a solution can be at hand.