Recent changes in accounting practices at banks could have a 
chilling effect on some mortgage holders, especially those that 
use payment coupon books to keep track of their loans.

In previous decades, when a borrower missed a payment on a 
mortgage, the lender would often consider them one month behind 
until they eventually caught up. Most lenders would impose a late 
fee and other interest or penalties, tacking them onto the back 
end of the loan as long as the lender stayed current with the 
rest of their payments.

With the number of bankruptcy filings creeping higher each year, 
and with increasing pressure on lenders to return dividends to 
shareholders, mortgage companies have quietly resorted to 
creative accounting practices to put pressure on slow payers.

Under new rules, a mortgage lender can ding your credit report 
every month that you are behind on a payment. In addition, they 
can impose penalties and late fees during the month you missed 
your payment. To add insult to injury, if you neglect to catch up 
with your payments the following month and you don't pay all of 
your late fees, the lender can impose late fees - on your late 
fees.

You might miss a payment for any number of reasons. It could be 
something as innocent as a check getting lost in the mail. Or it 
could be a symptom of a bigger problem like a divorce or a job 
loss. Either way, you receive equal treatment. And the news gets 
worse.

Many mortgage lenders have added clauses to their agreements that 
stipulate they can initiate a foreclosure on your home if you 
miss a predetermined number of consecutive payments, or if you 
miss too many payments in a given period. Therefore, you may only 
be a few hundred dollars behind on your mortgage, but you could 
find yourself in the same situation as someone who has not made 
payments on their home in six months.

For example, if your March payment arrived one day late, you 
incur a $50 late fee. Because you use a coupon book to track your 
loan, you might not even know you were assessed that fee in the 
first place. Although your next five payments arrived on time, 
your lender could charge you a late fee in April for failing to 
pay your March late fee. They could then charge you two late fees 
in May, for missing your March and April fees.

Before long, the late fees snowball out of control and you have 
to take drastic measures to save your home.

Therefore, experts recommend that you use secure online banking 
to make mortgage payments that can be independently traced and 
verified. Call your lender's automated customer service line at 
least once each month to confirm that your payment has been 
received, and that you are current on all outstanding 
installments and past late fees.

A little extra care and recordkeeping on your part can prevent 
much frustration. 

Kevin Adelsberg is a writer for FasteMortgage.com.
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