We have a military wife in NC with a consumer loan who says that she cannot be charged late fees. I am not finding this anywhere. Does anyone know where I should look?

I also posted in the NC forum but doesn't look like anyone was in there.

Thanks!

If the loan is covered under the SCRA the rate is restricted to 6%. Because late fees are considered interest under the SCRA you need to factor that into your rate. If the rate is 6%, she is correct in that you have no room for late fees. If the rate is 5%, you do have some room.

I have a question that expands on what was stated earlier in this post.

Scenario: A customer has a pre-existing debt and then is called to active duty (or enlists). Prior to being activated, the borrower made three payments outside the grace period. Their loan was assessed three late charges; however the borrower has yet to pay those late charges. The borrower is then activated. The loan servicer receives the SCRA notice, and makes adjustments on the loan to reduce the interest rate to 6% (and sets the servicing system up to prohibit further late charge assessments).

Question: Is the servicer prohibited from collecting those three late charges even though they occurred/were assessed prior to the active duty period?

Can anyone point me to the portion of the SCRA statute or any official commentary that addresses this?

Thank you.

I'm not an expert so I hope someone will come along and agree with or correct this statement.

SCRA doesn't eliminate the late fee for covered borrowers, but requires that the rate be lowered to 6%. If you use a 6% rate and still charge a late fee, this has the effect under SCRA of you charging more than 6%. So during the period of active duty, you can't charge both 6% and the late fee.

Since the three late charges on the account were before the period of active duty, I think it is OK for them to remain on the account.

Agreed.