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Apr 9, 2021
4
0
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Fifth Third Mortgage reported a missed payment on my credit report because I had an escrow shortage of $34. I have paid my mortgage on-time for over 8 years. I wasn't receiving my mail and so I was unaware of this escrow shortage. I made my usual mortgage payment in February 2021, thinking everything was fine. Throughout February, I received phone calls that said "scam likely" on the caller ID, and so I answer the calls. Eventually I did answer one of the calls, and the representative said I didn't make my mortgage payment. After telling them that I did, they noticed the payment was received, but because it was short $34 (due to an escrow shortage), the payment was listed as unapplied. The representative said that they could go in and apply the payment, so it will show that it is paid, and that I would need to make up the $34 shortfall. Additionally, they waived the late payment fee that as applied to my account. Because they called me on the weekend, I ended up calling-in Monday, March 1, and made the $34 payment. A few weeks later I noticed a 30-day late payment was reported to the credit bureau's and it dropped my credit score 55 points. I am in the process of refinancing my mortgage to a lower interest rate, but because of the negative report on my credit score, and a late payment on an FHA loan, I am unable to refinance to another FHA loan, and I am unable to qualify for a lower interest rate. This $34 shortfall will end up costing me $25,200 over the life of my mortgage loan.
 

Alexander Pahany

Staff Member
Forum Moderator
Jan 6, 2021
485
1,678
Houston, TX
I have had good luck with clients in your position simply asking the bank, in writing, to remove the late payment from the three credit reporting agencies. Explain the situation to them briefly and ask them to make the update. They typically update once per month, so you may have to wait to see results, but if they have brought your account to current and waived your late fee, you may have luck in getting them to remove the derogatory mark.
 

jsn55

Verified Member
Dec 26, 2014
11,035
13,200
San Francisco
Fifth Third Mortgage reported a missed payment on my credit report because I had an escrow shortage of $34. I have paid my mortgage on-time for over 8 years. I wasn't receiving my mail and so I was unaware of this escrow shortage. I made my usual mortgage payment in February 2021, thinking everything was fine. Throughout February, I received phone calls that said "scam likely" on the caller ID, and so I answer the calls. Eventually I did answer one of the calls, and the representative said I didn't make my mortgage payment. After telling them that I did, they noticed the payment was received, but because it was short $34 (due to an escrow shortage), the payment was listed as unapplied. The representative said that they could go in and apply the payment, so it will show that it is paid, and that I would need to make up the $34 shortfall. Additionally, they waived the late payment fee that as applied to my account. Because they called me on the weekend, I ended up calling-in Monday, March 1, and made the $34 payment. A few weeks later I noticed a 30-day late payment was reported to the credit bureau's and it dropped my credit score 55 points. I am in the process of refinancing my mortgage to a lower interest rate, but because of the negative report on my credit score, and a late payment on an FHA loan, I am unable to refinance to another FHA loan, and I am unable to qualify for a lower interest rate. This $34 shortfall will end up costing me $25,200 over the life of my mortgage loan.
This is awful. Are you sure that your refi won't go through? There should be some way to explain this late payment. I know that late payments on a mortgage are more serious than other debt ... but once in 8 years? Seems like there should be some slack there. Has your new lender formally stated that you'll not qualify for the lower rate? Do they consider your "not receiving your mail or answering your phone" a major problem? I'd talk to a few mortgage brokers to see if there's a way you can do a refi at a decent interest rate.
 
Apr 9, 2021
4
0
43
I have had good luck with clients in your position simply asking the bank, in writing, to remove the late payment from the three credit reporting agencies. Explain the situation to them briefly and ask them to make the update. They typically update once per month, so you may have to wait to see results, but if they have brought your account to current and waived your late fee, you may have luck in getting them to remove the derogatory mark.
That's good to hear! I just need to figure out who to send the letter to, so it gets to the right person that can help me. Any idea how to find that out?

Also, I have a history of paying a little extra on my mortgage payments (like $50/mo.), just to avoid problems like this. Because I have never designated where these extra funds should be applied, they have always applied it to the principal balance. I wonder if this is worth adding to my letter?
 
Apr 9, 2021
4
0
43
This is awful. Are you sure that your refi won't go through? There should be some way to explain this late payment. I know that late payments on a mortgage are more serious than other debt ... but once in 8 years? Seems like there should be some slack there. Has your new lender formally stated that you'll not qualify for the lower rate? Do they consider your "not receiving your mail or answering your phone" a major problem? I'd talk to a few mortgage brokers to see if there's a way you can do a refi at a decent interest rate.
Thanks for your comments. Because I took ~50 point hit on my credit report, they say I won't qualify for the lowest rate. I must have at least a 720 score to get the lowest rate and my score is now in the 690's. It could take six months to a year to get it over 720, and by then I'm sure rates will have gone up. Plus I can't qualify for an even lower rate FHA mortgage because you can't have a late payment within the last 12 months. This is really frustrating..
 

Alexander Pahany

Staff Member
Forum Moderator
Jan 6, 2021
485
1,678
Houston, TX
That's good to hear! I just need to figure out who to send the letter to, so it gets to the right person that can help me. Any idea how to find that out?

Also, I have a history of paying a little extra on my mortgage payments (like $50/mo.), just to avoid problems like this. Because I have never designated where these extra funds should be applied, they have always applied it to the principal balance. I wonder if this is worth adding to my letter?
I would put your request in writing and mail it certified, return receipt requested, to:

Fifth Third Bank
ATTN: Credit Bureau Reporting
5050 Kingsley Drive
MD 1 MOCFP
Cincinnati, OH 45227

I don’t think you need to include the information about the overpayment—you’re asking for a favor; there’s no need to muddy the waters.

I think you’ll succeed—they already updated your payment in their system and deleted your late fees. For all we know, they may have already updated the file for the credit reporting agencies and it just hasn’t processed yet—they only update once per month. Still, no harm in making sure.
 
Last edited:
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jsn55

Verified Member
Dec 26, 2014
11,035
13,200
San Francisco
You are wise to reduce your principal as you can. But that's not relevant to your current situation. Use our Company Contacts for who to send your letter to. If your bank is not listed, ask our Research Department to find out for you. Or it might be quicker to just call your bank and ask them for the person to whom you want to address your letter.
 
Apr 19, 2017
74
138
74
I have a history of paying a little extra on my mortgage payments (like $50/mo.), just to avoid problems like this. Because I have never designated where these extra funds should be applied, they have always applied it to the principal balance. I wonder if this is worth adding to my letter?
Never make an extra payment without designating how it should be applied! By default, many banks consider an excess to be an advance on the next payment, rather than the reduction of principal that you were hoping for.
 

kenish

Sep 1, 2015
1,175
2,230
KSNA
Keep up updated on removing the "late" flag. It may take several months for the credit bureaus to update their records after the bank instructs them to remove the derogatory. Since time seems to be essential, I recommend visiting a Fifth Third branch and talking to their mortgage person or a banker (not one of the tellers). The goal is to get the bank to issue a letter clarifying the situation and most prospective mortgage lenders will account for the irregular situation in their application process. (I don't know if FHA makes exceptions or they're a "rules are the rules" bureaucracy). Also talk to a friend in the mortgage biz and find out their recommendations on your situation.

For future "best practices", always confirm the payment went through, either on the payee's website or review your banking transactions online. Always "close the loop" to guard against errors or omissions in the payment chain (once I fat-fingered the payment amount on a utility bill. Fortunately their automated confirmation of my payment showed a balance still due.)
 
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Aam

Apr 25, 2021
1
0
44
This sounds frustrating. I am curious what an “escrow shortage “ looks like. Did you mean in a separate account and the bank deducted that from your mortgage payment to recoup the separate overdraft.

Also, the Spam risk identifier was a blessing and now a curse. I recently discovered that as well.