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#2113519 - 01/09/17 06:44 PM Late Payment Fee
peony Offline
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peony
Joined: Mar 2013
Posts: 250
Reviewed a Closing Disclosure and sent it back due to incorrect late payment fee listed. Processor contacted the vendor to correct it but they said because the property is in another state, it has to be whatever it is in that state. I thought late payment fee is based on where you are making payments to, not where your secured property is located. Can someone confirm?

Thanks!!

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Lending Compliance
#2113529 - 01/09/17 07:19 PM Re: Late Payment Fee peony
John Burnett Offline
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John Burnett
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Cape Cod
It's often the fact that late charges on real estate-secured loans are limited by the laws of the state where the property is located. Your vendor is correct.
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#2113535 - 01/09/17 07:29 PM Re: Late Payment Fee peony
peony Offline
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peony
Joined: Mar 2013
Posts: 250
Thanks!

We usually charge 4%. This particular situation has the property located in VA (we are located in NC) and per VA's state laws:

B. Any lender or seller may impose a late charge for failure to make timely payment of any installment due on a debt, whether installment or single maturity, provided that such late charge does not exceed five percent of the amount of such installment payment and that the charge is specified in the contract between the lender or seller and the debtor.

I'm thinking the vendor shouldn't have any problems changing to 4% since it does not exceed 5%....

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#2113536 - 01/09/17 07:30 PM Re: Late Payment Fee peony
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
I agree. Your state real estate laws and allowable charges would only apply to real estate located in your state. You can not export those laws and charges to real estate located in another state.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2113538 - 01/09/17 07:33 PM Re: Late Payment Fee peony
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
You can always charge less or not charge at all. You should be able to go into your loan set-up screens and adjust the late charge.
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The opinions expressed are mine and they are not to be taken as legal advice.

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