Millennium Madness Could Mangle Mortgage Payments

What do mortgage companies use to track your monthly payments? A computer software program, of course, one that's vulnerable to the Millennium Bug. Has your mortgage company tackled the Y2K problem, or will your January mortgage payment fall through the cracks on December 31, 1999? Remember that these programs are very efficient at spitting out a late fee or delinquent notice whenever your check isn't recorded in time. Will a Y2K snafu make a Deadbeat out of you?

The Y2K problem is haunting the business world, and mortgage servicers are not immune. It's good idea to prevent mistakes by your mortgage servicer from tarring your credit record or causing a foreclosure proceeding. Fortunately, there are things you can do to insulate yourself and your mortgage payment from computer snafus.

The best insurance you can give yourself is to be an Early Bird--make your January mortgage payment well ahead of December 31, 1999. In fact, mail in your check on the first of December, to allow for normal delays by the Postal Service brought on by the holidays. That will allow plenty of time for your payment to be received and processed before any computer crashes occur. When you receive proof of payment, save it! You might need it. There's another advantage to making your payment earlier--you'll be able to add the payment to your mortgage interest deduction for the 1999 tax-year.

If all else fails, you have the law on your side. Congress passed a little-known provision in the Y2K Act (the Year 2000 Readiness and Responsibility Act) designed to shield homeowners from mistakes and possible foreclosures caused by unprocessed mortgage payments. It says: "No person who transacts business on matters directly or indirectly affecting residential mortgages shall cause or permit a foreclosure on any such mortgage against a consumer as a result of an actual Y2K failure that results in an inability to accurately or timely process any mortgage payment transaction."

In addition, the law says that if you sent your payment in on time, but your mortgage company says you didn't, you have seven days to supply proof in writing. A canceled check, money order receipt or some other written documentation will qualify as proof. Your best bet is to send it by certified, return receipt mail.

The law exempts loans that are in default or facing default before December 15, 1999, and complaints made after March 14, 2000 are not covered.