We recently found out from our compliance consultant that our HELOC initial disclosure is missing the language about our fee for late payments (which is in the note).

We were told that since it's not on the disclosure, technically, we can't charge a late fee to those customers.

Is this true? Is there a way to correct this (for existing files)? Of course we will be updating the disclosure for future loans ASAP.

Might be time to switch compliance consultants.

Tell them to read the commentary:

5b(d)(7) Fees Imposed by Creditor

3. Fees not required to be disclosed. Fees that are not imposed to open, use, or maintain a plan, such as fees for researching an account, photocopying, paying late, stopping payment, having a check returned, exceeding the credit limit, or closing out an account do not have to be disclosed under this section.

Hmmmm...I think you are right!

Thanks!!

If you are looking for a new consultant there are several available herre

http://www.bankersonline.com/gurucentral.html

I noticed this old thread as I was searching for an answer. My question - I realize the Initial HELOC disclosure specifically does not need to have the late charges, but I have found that in some cases our HELOC notes (or plan agreements) do not state the late charge. I have told the department they need to disclose the late charge on the note in order to charge the late charge (we don't have on our Initial HELOC disclosures). Am I incorrect?

You would have to contract for the late charge in your loan agreement, otherwise you have no contractual right to assess them.

That is what I thought, but unfortunately there is over 100 of these that were issued before we identified. I think they've learned the value of having Compliance review BEFORE they implement new documents. THANKS DAN!