Late payments, collections, and deferred payments

Late payments are an inevitable aspect of direct mortgage investing (DMI). However, the Hosper team takes care of tracking, collecting, and disbursing late payments for you.

Here are 9 insights regarding our payment policies.

1. Every borrower must sign a pre-authorized debit (PAD) form, permitting Hosper to electronically pull payment from their account on the 1st of each month.
2. Hosper holds all payments in our licensed trust account until we confirm which payments have cleared, and which were returned due to error or insufficient funds.
3. On the 10th of each month, Hosper disburses all successful payments to investors. For returned payments, we notify each borrower and work towards a remedy. Our general policy is a 30-day grace period to resolve late payments.
4. Returned payments are noted in the NSF column under the "current interest" section on your monthly investor statement. When late payments are collected they will appear on future statements under the "account activity" section.
5. If we are expecting a loan payout, we do not pull the monthly payment. Instead, we add this payment to the principal due. This ensures no payments are pending when we discharge the mortgage. Be advised that this payment will appear as “NSF” in the meantime.
6. More than half of all returned payments each month are easily resolved. Typically, the borrower apologizes and sends us an e-transfer, and we remit the payment to investors before the end of the month.
7. In some cases, we may receive partial payments, request for deferral, or the borrower may be temporarily unable to pay. Where reasonable, Hosper will act with compassion. We may offer an extended grace period or agree to defer outstanding payments to a later date.We ask for proof of financial hardship and evaluate any impact to your investment as we develop an alternate payment plan for each loan. Hosper never waives or forgives any interest amount owed to you under the mortgage.
8. There are also tactical benefits to extending grace period or deferring payments. Offering small indulgences allows us to collect what we can, when we can, and keeps the channels of communication open. When lenders are too hasty to escalate a file to enforcement, this can squash any plans the client had to payout our mortgage. This may also lead to a longer repayment timeline. Mortgage enforcement is an important option to protect your investment, but it should be used only when necessary. Rushing to enforce on a property prematurely can introduce risks that could otherwise be avoided.
9. It is very common for late or deferred payments to be collected on payout of your mortgage. At discharge, clients are often refinancing or selling a property. Accrued interest can be added to payout and the borrowers do not have to pay out of pocket.

If you have any questions about late payments, collections, or deferred payments, please contact your Hosper Investment Service Representative. No question is too big or too small – We’re happy to help!