These are segments from an article in the August 1999 Legal Briefs from the OBA.
1. What is the maximum late fee on consumer loans?
Subpart (5) of 14A O.S. Section 3-203 allows a bank to charge a late fee on consumer loans equal to "the greater of five percent (5%) of the unpaid amount of the payment [for the most recent installment] or the dollar amount provided by the rule of the Administrator." The Administrator of Consumer Credit has provided for an amount of $16.50 under this section. Therefore, a bank may charge the greater of 5% of the past-due payment, or $16.50. As an example that I often give, if the regular installment payment on the consumer loan is more than $330, the 5% method will always give you a late fee that is larger than $16.50; and if the monthly installment is less than $330, the $16.50 late fee will always give you a larger amount than if you use the 5% method.
5. What late fee provisions apply to residential mortgage loans?
The UCCC does not apply to "loans made to enable the debtor to build or purchase a residence or to refinance such loan" (Section 1-202), so most first-mortgage real estate loans on a residence are not subject to the UCCC's late fee provisions. Another exclusion, in Section 3-105, provides that any loan "primarily secured by an interest in land" is not a consumer loan if the interest rate does not exceed 13%. On this basis, even most second mortgages, including home equity loans, would be exempt from the UCCC's late fee provisions.
However, there is a Federal regulation, at 12 C.F.R. Section 590, which applies to first-lien mortgage loans on residential real property that have been originated since March 31, 1980. This regulation provides that no late charge can be imposed if an installment is paid on or before the 15th day after the due date. (For a mortgage payment due on the first day of the month, a late fee cannot be imposed until the 17th day of the month.) The late charge on such loans may not exceed 5% of the unpaid amount of the installment that is late. A lender also cannot charge both a deferral charge and a late fee on the same installment payment for these loans.
Responses are mine, and are no reflection of my employer.