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#2131176 - 05/19/17 05:25 PM Late Fees NC vs SC
peony Offline
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peony
Joined: Mar 2013
Posts: 250
We closed a loan that is going to be sold to the secondary market but the buyer will not buy the loan because we disclosed 4% for late fees charge instead of 5% which is standard in SC. We thought that since the loan is originated in NC and is paying to us that is located in NC, the late fees needed to be what NC law is. According to the buyer, this is a detriment to the borrower therefore they will not purchase the loan.

Thoughts?

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Lending Compliance
#2131177 - 05/19/17 05:28 PM Re: Late Fees NC vs SC peony
peony Offline
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peony
Joined: Mar 2013
Posts: 250
Failed to mention in my original post that the collateral is property located in SC.

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#2131180 - 05/19/17 05:49 PM Re: Late Fees NC vs SC peony
Truffle Royale Offline

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Joined: Jul 2003
Posts: 17,349
The only thing I can figure out is that the investor wants to charge the highest possible amount allowed so you giving the borrower a lower penalty fee is not only detrimental to their pocketbook but makes more work by being a special case that cannot be handled like all their other loans for property in SC.

fwiw, the loan wasn't supposed to be paying to you, it was supposed to be paying to the investor so your logic for the lower 4% penalty fee doesn't really hold up either.

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#2131194 - 05/19/17 06:23 PM Re: Late Fees NC vs SC peony
Reg Warrior Offline
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Joined: Jan 2017
Posts: 195
I agree with peony, as long as the late charge does not exceed 5% you should be fine. However, when originating loans the late fees should be based on the state the collateral is located in, not where the loan was originated.

Most mortgage servicers have their system preprogramed according to each state's requirements, so this would be a manual override for the servicer.

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