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#12718 - 03/05/02 04:52 PM Late Charges on loans
Bville Offline
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Bville
Joined: May 2001
Posts: 1,282
Out West
Are there rules in the federal regulations that specify how soon after a payment is due we can charge a late charge? Specifically on a Heloc can we charge a late charge 10 days after the payment is due, or do we need to wait 15 days? For some reason I keep thinking there is a HUD related rule on real estate secured loans. Or is it regulated by state law?

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General Discussion
#12719 - 03/05/02 05:00 PM Re: Late Charges on loans
Al Miller Offline
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Al Miller
Joined: Oct 2000
Posts: 2,416
Pleasanton CA USA
I believe it is a state issue.
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Al Miller, CRCM
Opinions expressed are my own and not necessarily shared by my employer.

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#12720 - 03/05/02 06:40 PM Re: Late Charges on loans
Anonymous
Unregistered

See 12 CFR 560.33 for the 15 day rule.

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#12721 - 03/06/02 03:54 PM Re: Late Charges on loans
Bville Offline
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Bville
Joined: May 2001
Posts: 1,282
Out West
Sorry to do this, but it's time to go back to Compliance 101. Is there another name I can look under to find 12 CFR 560.33? I'm looking in my set of FDIC Law, Regulations & Related Acts binders and can't find it.

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#12722 - 03/06/02 04:30 PM Re: Late Charges on loans
Michele Petry Offline
New Poster
Joined: May 2001
Posts: 7
It's in the OTS Regs, Part 560 (Lending and Investment)

560.33 Late charges.
A Federal savings association may include in a home loan contract a provision authorizing the imposition of a late charge with respect to the payment of any delinquent periodic payment. With respect to any loan made after July 31, 1976, on the security of a home occupied or to be occupied by the borrower, no late charge, regardless of form, shall be assessed or collected by a Federal savings association, unless any billing, coupon, or notice the Federal savings association may provide regarding installment payments due on the loan discloses the date after which the charge may be assessed. A Federal savings association may not impose a late charge more than one time for late payment of the same installment, and any installment payment made by the borrower shall be applied to the longest outstanding installment due. A Federal savings association shall not assess a late charge as to any payment received by it within fifteen days after the due date of such payment. No form of such late charge permitted by this paragraph shall be considered as interest to the Federal savings association and the Federal savings association shall not deduct late charges from the regular periodic installment payments on the loan, but must collect them as such from the borrower.


It prohibits late charges before 15 days on home loan contracts.


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#12723 - 03/06/02 04:47 PM Re: Late Charges on loans
Howard Lax Offline
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Howard Lax
Joined: Jan 2002
Posts: 478
Bloomfield Hills, Michigan
Don't forget that mortgage companies must follow Section 560.33 if they wish to take advantage of the Parity Act.
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Howard A. Lax Lipson, Neilson, et. al. Bloomfield Hills, MI hlax@lipsonneilson.com

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#12724 - 03/06/02 07:17 PM Re: Late Charges on loans
SteveG Offline
Member
Joined: Jul 2001
Posts: 58
The OTS has also issued an opinion (94/GC-05) that states that the 15 day rule applies to home equity lines, even if these loans are made under the institution's consumer loan authority.

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#12725 - 03/06/02 07:19 PM Re: Late Charges on loans
Bville Offline
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Bville
Joined: May 2001
Posts: 1,282
Out West
Does the FDIC have a parallel reg anywhere?

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#12726 - 03/06/02 08:55 PM Re: Late Charges on loans
waldensouth Offline
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waldensouth
Joined: Nov 2001
Posts: 7,981
FINALLY ABOVE the gnat line
This is known as the preemption of State Lending Restrictions in your FDIC manual. 12 CFR 590 contains the 15 day late fee verbiage. However, this law contained a provision that states could "opt-out" of the provisions of this regulation. You need to find out if your state opted out of these provisions. In GA, they opted-out but then specifically, by statute, made our manufactured housing loans subject to these rules. Also see 12 USC 1735f-7 for the Act that the CFR implements.

Good links to review these cites are:
http://cfr.law.cornell.edu/cfr/
http://www4.law.cornell.edu/uscode/
_________________________
"Once you learn to read, you will be forever free."

- Frederick Douglass




My Opinion Only.

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#12727 - 01/27/03 04:54 PM Re: Late Charges on loans
Anonymous
Unregistered

I'm following the references noted in these threads and am trying to find penalties and corrective action associated with OTS 560.33. Unfortunately on a bi-weekly mortgage the payment is due every 15 days, and our late fees are being assessed in 5 days I need to find out what penalties are involved and come up with a recommended corrective action to managment if neccessary. Are there any?

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#12728 - 11/02/04 09:33 PM Re: Late Charges on loans
Anonymous
Unregistered

Howard, Melissa, Bville HELP!!!! Does this apply to FDIC regulated Banks? Please explain the background of the Federal preemption. I can't understand this for some reason.

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#12729 - 11/02/04 10:56 PM Re: Late Charges on loans
Anonymous
Unregistered

Does an OCC-regulated bank have a prohibition on late charges before 15 days?

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#12730 - 11/03/04 12:18 AM Re: Late Charges on loans
Andy_Z Offline
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Andy_Z
Joined: Oct 2000
Posts: 27,590
On the Net
Quote:

Does an OCC-regulated bank have a prohibition on late charges before 15 days?




No. This is governed by the state laws.
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AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#12731 - 11/03/04 02:32 PM Re: Late Charges on loans
P*Q Offline

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P*Q
Joined: May 2001
Posts: 8,458
Somewhere
Agreed, in my state, we are limited to the late charge percentage we can charge equity and mortgage customers.

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#12732 - 11/04/04 07:26 PM Re: Late Charges on loans
Anonymous
Unregistered

Is it the same for FDIC regulated Banks? What about the Parity Act (as referenced above)? What is that all about and do I need to consider it when making a decision about decreasing grace days before a payment is considered late (only on new loans)? or is it solely dependent on what State Law says? Thanks so much for your discussion on this topic.

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#12733 - 11/04/04 09:13 PM Re: Late Charges on loans
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,025
Bloomington, IN
Quote:

What about the Parity Act (as referenced above)?




This will depend whether your state opted out or not.

In IN first lien real estate loans are not regulated by the state, but all subordinate lien real estate loans are.

However, you have to be conscious of the consumer civil relief sections before you get to carried away.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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