Hi!

Does anyone have an opinion on whether or not you can take a late fee as part of the periodic payment from the suspense account? For example, if the borrower's P and I payment is $500 due on the 10th and he only paid $300 - we put the $300 in suspense. If he didn't pay the additional $200 by the 20th, we charged a late fee of say $50. If on the 10th of the next month, he pays $700, can we take $250 from the $700 to apply to the suspense account to make the $500 payment and pay our late fee and then put $450 in suspense -because it is not a full periodic payment?

Contract issue.

I was thinking the rules re: taking a payment from suspense when enough accumulates for a periodic payment would apply. My thought was you could only take enough to make a periodic payment, but I guess that is clearly spelled out, so it is your opinion if our contract states we will take principal, interest, late charges, fees from payments - even if the funds are coming from suspense, the contract terms would prevail?

I really suggest that you visit with your legal counsel. Some mortgage notes are very specific on what happens to partial payments and some are not. Whether there is State law or case law to consider is another issue.

Ok, thank you Randy for your time and guidance. Always appreciated!