The servicer can return the payment or put it in a suspense account. Either way, you can wind up in foreclosure.
What the Mortgage Says
The company that collects your mortgage payments * be it the bank who made the loan or a loan servicer * is not required to accept partial payments. Most every (if not every) mortgage in the United States contains a sentence like this:
*Lender may return any payment or partial payment if the payment or partial payments are insufficient to bring the loan current.*
Notice that the sentence says, *may return.* When the word, *may* is used in a legal document, it means that the person has a choice. Because the mortgage says *may,* the bank or loan servicer is not required to either accept or return a partial payment.
Loan Servicers Can Force You Into Foreclosure
Servicers use this sentence to force homeowners to pay more than they owe. For example, suppose the loan servicer makes a mistake when calculating how much to escrow for property taxes and the result is that the homeowner must pay more than he is obligated to pay. If the homeowner makes a payment for the correct amount, the loan servicer can return the payment because it is not enough to make the loan current. The loan servicer decides how much is needed to bring the loan current, and it says that the overly high, wrong amount is needed.
You are now late one payment, which the loan servicer may report to the credit reporting agencies, causing your credit score to drop. Worse, you are technically in default. If this goes on for a couple of months, the loan servicer can file a foreclosure action against you even though you do not owe what they say you owe.
Keep an Eye on the Suspense Account
If the partial payment is accepted, regulations imposed by the Consumer Financial Protection Bureau come into play. Your mortgage may also have provisions about what the loan servicer can do.
If the loan server accepts the partial payment, it must put the partial payment in a suspense account. A suspense account is just a place to park money until it is ready to be credited to your account.
The loan servicer must credit a full payment to your account when there is enough money in the suspense account to pay a full monthly payment of principal, interest and escrow (if you escrow).
Although there are strict rules governing the use of suspense accounts, loan servicers may not follow them. If the servicer does not make payments from the suspense account when it should, you are getting later than you should and you will look worse to the credit bureaus.
You cannot count on the loan servicer to do the right thing. You must check your monthly statement to make certain that the rules are being followed. Problem is, some monthly statements only show when an amount is put in the suspense account. They do not show the amount in the account. You must get this amount, called the *escrow balance* from your loan servicer.
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