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#187620 - 05/06/04 06:05 PM HOEPA Prohibition on Fees to Cure Default?
Geoz Offline
100 Club
Joined: Apr 2003
Posts: 148
Colorado
Help! We've got our first HOEPA covered loan (APR triggered). Based on a High Cost-High Rate Loan Fed/State Law Comparison that I printed from BOL a while back, it states federal law prohibits any fee, penalty or charge to cure default. I cannot find support for this in Reg. Z, 226.34, only the reference to prepayment penalties in 226.32. Am I totally missing something?

Our Laser Pro promissory note's LENDER'S RIGHTS and ATTORNEY'S FEES sections allow the bank to charge reasonable collection costs in event of default, and attorney fees and expenses if applicable.

Does anyone have guidance on this?

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#187621 - 05/06/04 08:58 PM Re: HOEPA Prohibition on Fees to Cure Default?
Geoz Offline
100 Club
Joined: Apr 2003
Posts: 148
Colorado
Anybody have feelings one way or the other on this? I'd appreciate a confirmation I'm reading this right. We'll send the HOEPA notice today, but I'm feeling unsure about default fees.

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#187622 - 05/06/04 09:58 PM Re: HOEPA Prohibition on Fees to Cure Default?
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
I am not aware of any provision that would prevent you from assessing normal collection costs and attorney fees due to default.
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#187623 - 05/06/04 10:09 PM Re: HOEPA Prohibition on Fees to Cure Default?
Geoz Offline
100 Club
Joined: Apr 2003
Posts: 148
Colorado
Thanks! I was coming to that conclusion also --- I appreciate your input!

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#187624 - 05/07/04 01:49 PM Re: HOEPA Prohibition on Fees to Cure Default?
ToTo Offline
Platinum Poster
Joined: Apr 2004
Posts: 595
OZ
One other point, under 226.32(d)(4), an increase in the interest rate after default is prohibited.

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