If you sign up for automatic mortgage payments, where your mortgage company makes an electronic withdrawal from your account instead of you mailing a check, are you off the hook if the mortgage company and bank can't complete the electronic transaction?

Assume that there is no debt moratorium declared and there are sufficient funds in the account. Who's responsible in this case - wouldn't it be the mortgage company/bank instead of the homeowner?

Cook, Robert A. - I will be posting as Rob instead of Robert from now on.

-- Rob Michaels (sonofdust@net.com), November 24, 1998

Answers

Rob,

I thought of that too, but then wondered what would happen if the bank's computers had a problem and sent more than they were authorized to send.

Just a thought.

-- Gail (~~~~~~@~~~~~.com), November 24, 1998.

Ah, there's the Rob. 'Tis fine a thing you've done, good sir.

I put that in as one of the things Congress should protect consumers from (no withrawal, wrong withdrawal, right withdrawal -> wrong deposit, right withdrawal -> wrong transfer -> wrong deposit) as part of a Y2K Consumer Protection Bill. We'll see in a few weeks what happens.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), November 24, 1998.

Gail: I hadn't thought of that but you're right, it's possible. Transaction errors happen now even without Y2K. There are probably other reasons why going automatic may be risky. I'm just trying to think it out. The question that I have is who would be responsible if the mortgage company or bank could not do the automated payment. Common sense says it shouldn't be the homeowner, as long as there is enough money in the account, but common sense and law sometimes haven't been introduced to each other.

-- Rob Michaels (sonofdust@net.com), November 24, 1998.

I think that even if the mechanism by which the payment is made doesn't work properly, it in no way changes the underlying contractual obligation to make payment on the debt. I would think that the mortgage company would have to take the electronic difficulty into count and not charge the homeowner, or the homeowner should challenge any interest/penalty/adverse credit reporting as a result of electronic mishaps.

-- Karen Cook (browsercat@hotmail.com), November 25, 1998.

Thanks Karen. What you posted makes sense to me. Let's wait to see what happens with Robert's Y2K Consumer Protection Bill.

-- Rob Michaels (sonofdust@net.com), November 25, 1998.

Most credit reports I see are screwed up. Reporting agencies mess up your credit and it takes months to fix. Mortgages will be the same. If we get to a 5 % default rate, don't worry things will be totally f'd up. Put a check in your mail box, lift the flag and forgetaboutit. Keep your house warm and your tummy full. "The worries of today, will not be the worries of tomorrow." Billism

-- Bill (bill@microsoft.com), November 25, 1998.