Anyone know what the allowable late fees for purchases, refinance transactions and home equity loans are in Indiana? Thanks.

I can't tell you where to verify this, but I understand it to be $16. This was recently raised from $15.50, and appears on all of our notes.

Go to the following link for current charges effective 7/1/02.

http://www.dfi.state.in.us/conscredit/t750_2002.htm

For subordinate liens on real estate, the maximum late charge is $16.00. First liens are not regulated by the state. IN UCCC 3-203.5 defines the late charge.

We charge 5% of the unpaid late payment or $16.00 whichever is less for all our consumer loans. For our first lien mortgages, we charge 5% of the unpaid P&I payment.

I forgot to include this link which is to Title 24 which covers loans:

http://www.in.gov/legislative/ic/code/title24/ar4.5/ch3.html

Thanks for the responses. The links provided state that this is for loans not in excess of $50,000. I am needing info for residential loans, most of which will be in excess of $50,000. I looked through this site and could not find anything. Thanks.

If you are doing a residential mortgage transaction (purchases or refis) and taking first liens, then the late charge is not regulated by state statues. As I said in my earlier post we charge 5% of the upaid P&I payment that is past due, you can also charge 5% of the full P&I payment if you wish.

The Indiana Department of Financial Institutions (DFI) is 317-232-3955. Mark Tarpey is the person I usually talk to when I have questions.

The Bank recently went on Bisys and setting up loan specs for assessing late charges our rep told us that under Indiana law this was the method to use. (1)Do not assess a late charge on the current payment of a delinquent loan if that payment is received between the Due Date and the end of the grace period. Apply the payment to the most delinquent payment due. We would like to use this method instead (2) Assess a late charge on the current payment of a delinquent loan even if the payment is received between the Due Date and the end of the grace period. Under UCC do you see a problem?

Yes.

IC 24-4.5-3-203.5: Delinquency Charges; Credit Charges Not Precomputed

Sec. 203.5. Delinquency Charges.

(1) With respect to a consumer loan, refinancing, or consolidation, the parties may contract for a delinquency charge of not more than five dollars ($5) on any installment or minimum payment due not paid in full within ten (10) days after its scheduled due date .

2) A delinquency charge under this section may be collected only once on an installment however long it remains in default. With regard to a delinquency charge on consumer loans made under a revolving loan account, the delinquency charge may be applied each month that the payment is less than the minimum required payment on the account. A delinquency charge may be collected any time after it accrues. A delinquency charge may not be collected if the installment has been deferred and a deferral charge ( IC 24-4.5-3-204) has been paid or incurred.

(3) A delinquency charge may not be collected on an installment or payment due that is paid in full within ten (10) days after its scheduled due date even though an earlier maturing installment, minimum payment, or a delinquency charge on:

(a) an earlier installment; or

(b) payment due;

may not have been paid in full. For purposes of this subsection, payments are applied first to current installments or payments due and then to delinquent installments or payments due.

(4) If two (2) installments or parts of two (2) installments of a precomputed loan are in default for ten (10) days or more, the lender may elect to convert the loan from a precomputed loan to a loan in which the finance charge is based on unpaid balances. A lender that makes this election shall make a rebate under the provisions on rebates upon prepayment ( IC 24-4.5-3-210) as of the maturity date of the first delinquent installment, and thereafter may make a loan finance charge as authorized by the provisions on loan finance charges for consumer loans ( IC 24-4.5-3-201) or supervised loans ( IC 24-4.5-3-508). The amount of the rebate shall not be reduced by the amount of any permitted minimum charge ( IC 24-4.5-3-210). Any deferral charges made on installments due at or after the maturity date of the first delinquent installment shall be rebated, and no further deferral charges shall be made.

(5) The amount of five dollars ($5) in subsection (1) is subject to change pursuant to the section on adjustment of dollar amounts ( IC 24-4.5-1-106).

(6) If the parties provide by contract for a delinquency charge that is subject to change, the lender shall disclose in the contract that the amount of the delinquency charge is subject to change as allowed by IC 24-4.5-1-106.

Example:

Payment due 5/1 - not paid. Late charge assessed on 5/11.

Payment received 6/10. Even though the payment is applied to bring the loan due to 6/1 you can not assess another late charge for June. The payment on 6/10 is consider payment for the 6/1 payment, therefore the 6/1 payment is not past due. Your 5/1 payment is still past due and you have already assessed a late charge for that payment.

PS. The current late charge is $16 and will go to $16.50 on 7/1/04.