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#1166740 - 04/20/09 04:06 PM Loan Late Fees & Loan Payment Returned Check Fees
Sgt. Pepper Offline
Member

Registered: 08/28/06
Posts: 94
Loc: Massachusetts
I am trying to verify the accuracy of the following information regarding the maximum late fees on loans and returned payment fees (based on Massachusetts statutes).

Late Fees
Installment loans and open-end credit: 5% of the installment or $5.00 (whichever is less) not to be assessed until payment is at least 15 days past due.

Residential mortgage loans and HELOCs (1-4 family owner-occupied): 3% of the overdue principal and interest payment (excluding taxes, etc.) not to be assessed until payment is at least 15 days past due (10 days past due for biweekly loans).

Residential mortgage loans and HELOCs(1-4 family non-owner-occupied and/or multi-family): No restrictions.

Commercial installment, open-end, and mortgage loans: No restrictions.

Returned Payment Fees
Installment loans and open-end credit: Not to exceed $10.00.

Residential mortgage loans and HELOCs (1-4 family owner-occupied): Not allowed??? (I couldn't find any reference for such a fee in the statutes).

Residential mortgage loans and HELOCs(1-4 family non-owner-occupied and/or multi-family): Not allowed??? (I couldn't find any reference for such a fee in the statutes).

Commercial installment, open-end, and mortgage loans: No restrictions.

Thank you in advance for your assistance.
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#1173723 - 04/30/09 04:04 PM Re: Loan Late Fees & Loan Payment Returned Check Fees [Re: Sgt. Pepper]
Sgt. Pepper Offline
Member

Registered: 08/28/06
Posts: 94
Loc: Massachusetts
Anyone able to assist?
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#1173840 - 04/30/09 05:42 PM Re: Loan Late Fees & Loan Payment Returned Check Fees [Re: Sgt. Pepper]
P*Q Offline

Power Poster

Registered: 05/29/01
Posts: 7360
Loc: By the ocean
Here's some info on late charges:
Installment Loans (Auto loans, personal loans, passbook secured)



CHAPTER 255D. RETAIL INSTALLMENT SALES AND SERVICES



Chapter 255D: Section 20. Delinquency and collection charge; dishonored check charge

Section 20. The holder of a retail installment sale agreement may, if the agreement so provides, collect a delinquency and collection charge on each installment in default for a period of not less than fifteen days in an amount not in excess of five percent of each installment or five dollars, whichever is less,





Open-end (Overdraft and Home Equity Line of credit)





Chapter 140: Section 114B. Finance charges on open end credit accounts; maximum rates; computation



Section 114B. Notwithstanding the provisions of sections ninety A, one hundred, and one hundred and fourteen A, a creditor may charge a daily, monthly or other periodic rate of finance charge on loans made pursuant to any open-end credit plan as defined by section one of chapter one hundred and forty D, equivalent to but not in excess of eighteen percent determined in accordance with paragraph (2) of subsection (a) of section five of said chapter one hundred and forty D; provided, however, that no finance or other charge shall begin to accrue until the date upon which payment has been made by the creditor on any transaction under any such open-end credit plan; and, provided further, that if the index rate for any calendar quarter, as hereinafter determined, exceeds eighteen percent, the creditor may, during such calendar quarter, charge such daily, monthly or other periodic rate or rates as may be established by such creditor. The commissioner of banks shall determine as of the computation dates of December first, March first, June first and September first of each year, and not later than one business day after each such computation date, the index rate for the succeeding calendar quarter beginning January first, April first, July first and October first, respectively. The index rate determined on each computation date for the following calendar quarter shall be the number determined by doubling the average of the rates established and announced, as the auction average on a discount basis, for United States Treasury bills with maturities of ninety-one days at the auctions held during the three calendar months preceding the computation date. At the option of the creditor, the periodic rate that a creditor charges on an account may be adjusted to reflect a change in the index rate either on the first day of the respective calendar quarter or on the first day of the first billing cycle of the account immediately following such date; provided, however, that any limitation on finance charges imposed under this section shall remain in effect for three months from the date so chosen. A finance charge not in excess of fifty cents for a monthly or longer billing cycle or the pro rata part of fifty cents for a billing cycle shorter than monthly may be assessed if the finance charge otherwise assessable is less than fifty cents. For the purpose of this section, a billing cycle shall be considered to be monthly if the billing dates are on the same day of each month or do not vary by more than four days therefrom. A creditor may, pursuant to an open-end credit plan, charge, receive and collect a delinquency charge on any payment not paid in full within fifteen days of its due date in an amount equal to ten percent of the outstanding balance or ten dollars, whichever is less; provided, however, that no such delinquency charges shall be charged, received or collected unless the creditor, at least thirty days prior thereto, shall have mailed a notice informing its borrowers of the change in terms of such plan providing for the charging, receiving and collecting of a delinquency charge and disclosing the amount of such delinquency charge that may be imposed as part of said open-end credit plan.

In addition to disclosures of such rate required by chapter one hundred and forty D, the commissioner of banks shall have the authority to promulgate regulations requiring additional disclosures by creditors concerning periodic rate, other costs of credit, and any other additional features of the agreement.

A finance charge imposed on a transaction subject to this section but not subject to the provisions of the first paragraph of section twenty of chapter one hundred and forty D shall be computed on (i) the previous balance after deducting all payments on account received by the creditor during the cycle and all credits to the account during the cycle applicable to any transaction reflected in the previous balance; or (ii) the average daily balance determined by adding the daily balances on the account for each day in the billing cycle and dividing the total by the number of days in the billing cycle; or (iii) daily balances.

Any such delinquency charge shall not be included in the computation of said finance charge.



Chapter 183: Section 28B. Open-end mortgage; subsequent loans from mortgagee



Section 28B. Any sum which shall be lent by the mortgagee to the mortgagor at any time after the recording of an open-end mortgage that secures such sum shall be equally secured with and have the same priority as would any such sum disbursed as of the time of the recording of such mortgage. As used in this section an open-end mortgage shall mean a mortgage of real estate the terms of which provide that it secures a sum lent by the mortgagee to the mortgagor from time to time pursuant to an open-end credit plan as defined in section 1 of chapter 140D, but the interest rate on any such loan and any delinquency charge thereon on any payment not paid in full within 15 days of its due date shall be governed by section 114B of chapter 140. In the event of any conflict between this section and chapter two hundred and fifty-four or any other provision of law, the provisions of this section shall control. Notwithstanding the foregoing, the priority afforded under this section shall apply only to (i) the principal sum so loaned, provided, however, that in the case of an open-end mortgage recorded after the effective date of this section, such priority shall apply only to so much of such principal sum as does not exceed the amount specified in such mortgage as the maximum sum intended to be secured thereby; (ii) interest on the principal amount to which such priority applies; and (iii) all charges and fees other than principal and interest that are secured by such mortgage. In the event that an open-end mortgage is amended to increase the amount intended to be secured thereby, such mortgage shall be deemed to have been recorded, with respect only to the amount of such increase, at the time such amendment is recorded.

At any time after the termination of the authority of all persons to borrow sums pursuant to an open-end credit plan secured by an open-end mortgage, the holder of such mortgage shall, within ten business days of the request of any person with an interest in the mortgaged real estate, furnish to such person an executed and acknowledged written notice stating that such authority has terminated and stating the amount of the loans secured by such mortgage that remain outstanding on the date of such notice, which notice may be recorded.



Mortgages/Home Equity closed-end loans





Chapter 183: Section 59. Late charges or penalties



Section 59. A mortgagee, assignee or holder of a mortgage note secured by a first or subordinate lien on a dwelling house of 4 or less separate households or on a residential condominium unit occupied or to be occupied in whole or in part by the mortgagor shall not require the mortgagor to pay a late charge or late payment penalty unless the penalty is specifically authorized in the loan documents.

A mortgagee, assignee or holder of a mortgage note secured by a first or subordinate lien on a dwelling house of 4 or less separate households or on a residential condominium unit occupied or to be occupied in whole or in part by the mortgagor shall not require the mortgagor to pay a penalty or late charge for any payment paid within 15 days or in the case of a bi-weekly mortgage payment, paid within 10 days, from the date the payment is due.

In no event, in assessing a penalty because of the delinquency in making all or any part of a periodic payment under a mortgage note, shall the penalty or late charge exceed 3 per cent of the amount of principal and interest overdue, and in calculating the penalty or late charge, any amount of the periodic payment representing estimated tax payments required by the terms of the mortgage note or deed shall not be included.

A late payment penalty or late charge may not be charged more than once with respect to a single late payment. If a late payment fee is deducted from a payment made on the loan, and the deduction causes a subsequent default on a subsequent payment, no late payment fee may be imposed for the default. If a late payment fee has been once imposed with respect to a particular late payment, a fee shall not be imposed with respect to any future payment which would have been timely and sufficient, but for the previous default.

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#1174667 - 05/01/09 04:00 PM Re: Loan Late Fees & Loan Payment Returned Check Fees [Re: P*Q]
Sgt. Pepper Offline
Member

Registered: 08/28/06
Posts: 94
Loc: Massachusetts
Pizza Queen, thanks for your response. It looks like with the exception of installment loans, Massachusetts law doesn't specify restrictions on returned check/payment fees.

Anyone charging returned check/payment fees on loans other than installment loans?
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