I am looking into Payment Reversal Fees charged to loans. I have noticed some loans that have been charged for reversing payments that normally take a deposit account overdrawn and the loan is charged a reversal fee and the depsoit account are charged a NSF fee. I am wondering if this seems unusual? Also does the loan reversal need to be disclosed?

Nick, I'm not sure if I'm barking up the right tree or not, but it sounds like you are charging a NSF fee for the loan payment. You need to look at your state law. In IN we can charge (if contracted for) a $20 NSF fee for loan payments presented that are NSFs. If we are also the depository bank, we can charge the $20 loan NSF fee and our deposit NSF fee which is currently $25.

On open-end credit, the loan payment reversal fee would need to be disclosed under Reg Z at 226.6(b)- Other Charges. There is not a corresponding requirement on closed-end credit, so it would be more of a contractual issue. As Dan recommended, you need to look to State law regard whether it is allowed and any limitations on the amount. On HELOCs, you would be prevented from imposing a new fee on any existing plans.