I was wondering if anyone else was dinged on this and what you did to fix it.
We are arguing with state examiners about charging late fees on loans that paid down their principal earlier in the loan. For example, if we have a $10,000 instalment loan and the customer pays down $2,000 on principal, then if a year from now he stops making payments, they say cannot charge a late fee. When I asked them to cite a specific regulation, they said there wasn't any, that this was an "interpretation" of the regs handed down from the Madison office.
When I called the Madison office, I was told that the late charges would be considered prepayment penalties, and would fall under WI Consumer Act Part 422.208.
Anyone else run into this? If we gotta fix it, we gotta fix it, I just don't know how at this point. I am not that well versed on how the bookeeping part of payments are handled, but one of my co-workers said this would reek havoc with our coupon book loans.
I am foreseening watch list and delinquency list problems, if we advance the payment due dates. Someone could pay a lump sum early, then go bankrupt, and wouldn't show up on the delinquency list and therefore not be put on the watch list.
Opinions, comments, suggestions?
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