{"id":36618,"date":"2022-01-07T05:52:12","date_gmt":"2022-01-07T13:52:12","guid":{"rendered":"https:\/\/pdxlegal.com\/?p=36618"},"modified":"2022-01-21T11:28:21","modified_gmt":"2022-01-21T19:28:21","slug":"mortgage-accounting-explained","status":"publish","type":"post","link":"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/","title":{"rendered":"What Is in the Mortgage Statement You Receive Monthly?"},"content":{"rendered":"<h2><span class=\"ez-toc-section\" id=\"Mortgage_Accounting_Explained\"><\/span><span style=\"font-weight: 400;\">Mortgage Accounting Explained<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<label for=\"ez-toc-cssicon-toggle-item-6629dc6a347f6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6629dc6a347f6\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/#Mortgage_Accounting_Explained\" title=\"Mortgage Accounting Explained\">Mortgage Accounting Explained<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/#1_The_loan_documents_control_the_payment_NOT_the_statement\" title=\"#1: The loan documents control the payment NOT the statement.\">#1: The loan documents control the payment NOT the statement.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/#i\" title=\"\u00a0\">\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/#2_Payments_are_applied_to_the_oldest_month_due\" title=\"#2: Payments are applied to the oldest month due.\">#2: Payments are applied to the oldest month due.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/#2_Payments_are_applied_to_the_oldest_month_due-2\" title=\"#2: Payments are applied to the oldest month due.\">#2: Payments are applied to the oldest month due.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/#3_Partial_Payments_dont_apply\" title=\"#3: Partial Payments don\u2019t apply.\">#3: Partial Payments don\u2019t apply.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/pdxlegal.com\/mortgage-accounting-explained\/#Consult_a_Portland_Foreclosure_Defense_Attorney\" title=\"Consult a Portland Foreclosure Defense Attorney\">Consult a Portland Foreclosure Defense Attorney<\/a><\/li><\/ul><\/nav><\/div>\n\n<p><span style=\"font-weight: 400;\">If you are an Oregon homeowner concerned with staying current on your mortgage then this series is for you. Today we are going to talk about mortgage accounting I will be giving you three important things to know to help you decipher that mortgage statement you receive every month.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Your home is your biggest asset and, besides your family<\/span> <span style=\"font-weight: 400;\">and your pet, it is probably the most important thing for you to protect. Your mortgage payment is likely the largest bill you have every month and sometimes the most difficult bill to pay.\u00a0 If you slip at all in making a payment it gets really hard to determine where you are at.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"1_The_loan_documents_control_the_payment_NOT_the_statement\"><\/span><span style=\"font-weight: 400;\">#1: The loan documents control the payment NOT the statement.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"i\"><\/span><span style=\"font-weight: 400; display: none;\">\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Your monthly mortgage statement may be WRONG and often is WRONG when people fall behind on their payments or the loan service is transferred.\u00a0 <\/span><b>The first thing you must do is locate the Loan Note and Deed of Trust from that large stack of papers you signed.<\/b> <span style=\"font-weight: 400;\">\u00a0<\/span><span style=\"font-weight: 400;\">How much you pay and how that money is applied to your loan is controlled by your loan documents.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There are many variables that affect how much you pay each month and are therefore necessary to establish whether you are current or not. Things like\u2026<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<ol>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 <\/span> <span style=\"font-weight: 400;\">Do you have a fixed-rate loan or a variable rate loan?\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 <\/span> <span style=\"font-weight: 400;\">If variable, it is tied to a standard index like the Prime Lending Rate or LIBOR?\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 <\/span> <span style=\"font-weight: 400;\">What is the margin which is added to that index to come up with the actual interest rate?\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 <\/span> <span style=\"font-weight: 400;\">Does the rate change monthly, semi-annually, or annually?\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\"> \u00a0 \u00a0 <\/span> <span style=\"font-weight: 400;\">Do you have a fully amortized loan or is it interest only that resets after five to ten years?\u00a0<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">The answer to each of these questions will determine whether the payment amount demanded on your monthly statement is in fact correct.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When a loan is service transferred \u2013 meaning the company to whom you make your payment has changed \u2013 this is a hurdle that oftentimes causes the accounting to trip up.\u00a0 If your loan payee changes, pay very close attention to the mortgage statements before and after that date.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"2_Payments_are_applied_to_the_oldest_month_due\"><\/span><span style=\"font-weight: 400;\">#2: Payments are applied to the oldest month due.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"2_Payments_are_applied_to_the_oldest_month_due-2\"><\/span><span style=\"font-weight: 400; display: none;\">#2: Payments are applied to the oldest month due.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">This is important, and some exceptions exist, but for the vast majority of people, a mortgage payment is applied to the oldest month due NOT to the month in which you actually made the payment.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s an example:<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s January and you make your payment of $1500.00 on time. You get laid off in February and cannot make the payment. In March you start collecting unemployment and you make a payment, but because of how mortgage accounting works, the payment you make in March is applied to the oldest payment due \u2013 in this case that would be February.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When you get your April mortgage statement it shows you are due for March, which you know isn\u2019t right because you paid March.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Not so fast, the lender would be correct \u2013 the payment you made in March was applied to February and you are in fact due for March. To make it even more complicated let\u2019s turn to 3<\/span><span style=\"font-weight: 400;\">rd<\/span><span style=\"font-weight: 400;\"> thing to know, and boy is it a doozy.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"3_Partial_Payments_dont_apply\"><\/span><span style=\"font-weight: 400;\">#3: Partial Payments don\u2019t apply.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Ok, bear with me here because we are getting into the deep weeds.\u00a0 If you pay less than a full mortgage payment, the loan servicer is NOT going to apply your partial payment, instead, they will hold the money until you have paid enough to make a full payment.\u00a0 Let\u2019s jump back into the scenario we were just discussing\u2026<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s now April and you cannot afford to make a full payment but you want to do your best so you send in $750.00. Because this is only half a payment, it is NOT applied to your loan.\u00a0 When you get your May mortgage statement, it will show you are due for March and April and now May<\/span><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In May, you are still struggling but can make another $750.00 payment.<\/span> <span style=\"font-weight: 400;\">The loan servicer cashes your check but notice what happens here.\u00a0 The money you pay in May slides up to combine with the money you paid in April which all slides up to apply to the payment due in March.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In June you get a mortgage statement that indicates you are due for the April payment and based on this analysis, the loan servicer is right yet again.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There you have it, three important things to know to help decipher mortgage accounting including:\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">#1 \u2013 the loan documents control, so locate them first.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">#2 \u2013 payments are applied to the oldest due NOT the month you pay.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">#3 \u2013 payments are only applied in full, not partial.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Consult_a_Portland_Foreclosure_Defense_Attorney\"><\/span><span style=\"font-weight: 400;\">Consult a Portland Foreclosure Defense Attorney<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">If you\u2019re a Portland homeowner having difficulties staying current on your mortgage, then don\u2019t hesitate to consult with our <\/span><a href=\"https:\/\/pdxlegal.com\/\"><span style=\"font-weight: 400;\">Portland foreclosure defense attorney.\u00a0\u00a0<\/span><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mortgage Accounting Explained If you are an Oregon homeowner concerned with staying current on your mortgage then this series is for you. Today we are going to talk about mortgage accounting I will be giving you three important things to know to help you decipher that mortgage statement you receive every month.\u00a0 Your home is [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":35386,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"_links":{"self":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts\/36618"}],"collection":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/comments?post=36618"}],"version-history":[{"count":5,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts\/36618\/revisions"}],"predecessor-version":[{"id":36747,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/posts\/36618\/revisions\/36747"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/media\/35386"}],"wp:attachment":[{"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/media?parent=36618"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/categories?post=36618"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pdxlegal.com\/wp-json\/wp\/v2\/tags?post=36618"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}