Late Charges on loans

Are there rules in the federal regulations that specify how soon after a payment is due we can charge a late charge? Specifically on a Heloc can we charge a late charge 10 days after the payment is due, or do we need to wait 15 days? For some reason I keep thinking there is a HUD related rule on real estate secured loans. Or is it regulated by state law?

I believe it is a state issue.

See 12 CFR 560.33 for the 15 day rule.

Sorry to do this, but it's time to go back to Compliance 101. Is there another name I can look under to find 12 CFR 560.33? I'm looking in my set of FDIC Law, Regulations & Related Acts binders and can't find it.

It's in the OTS Regs, Part 560 (Lending and Investment)

§560.33 Late charges.
A Federal savings association may include in a home loan contract a provision authorizing the imposition of a late charge with respect to the payment of any delinquent periodic payment. With respect to any loan made after July 31, 1976, on the security of a home occupied or to be occupied by the borrower, no late charge, regardless of form, shall be assessed or collected by a Federal savings association, unless any billing, coupon, or notice the Federal savings association may provide regarding installment payments due on the loan discloses the date after which the charge may be assessed. A Federal savings association may not impose a late charge more than one time for late payment of the same installment, and any installment payment made by the borrower shall be applied to the longest outstanding installment due. A Federal savings association shall not assess a late charge as to any payment received by it within fifteen days after the due date of such payment. No form of such late charge permitted by this paragraph shall be considered as interest to the Federal savings association and the Federal savings association shall not deduct late charges from the regular periodic installment payments on the loan, but must collect them as such from the borrower.

It prohibits late charges before 15 days on home loan contracts.

Don't forget that mortgage companies must follow Section 560.33 if they wish to take advantage of the Parity Act.

The OTS has also issued an opinion (94/GC-05) that states that the 15 day rule applies to home equity lines, even if these loans are made under the institution's consumer loan authority.

Does the FDIC have a parallel reg anywhere?

This is known as the preemption of State Lending Restrictions in your FDIC manual. 12 CFR 590 contains the 15 day late fee verbiage. However, this law contained a provision that states could "opt-out" of the provisions of this regulation. You need to find out if your state opted out of these provisions. In GA, they opted-out but then specifically, by statute, made our manufactured housing loans subject to these rules. Also see 12 USC 1735f-7 for the Act that the CFR implements.

Good links to review these cites are:
http://cfr.law.cornell.edu/cfr/
http://www4.law.cornell.edu/uscode/

I'm following the references noted in these threads and am trying to find penalties and corrective action associated with OTS 560.33. Unfortunately on a bi-weekly mortgage the payment is due every 15 days, and our late fees are being assessed in 5 days I need to find out what penalties are involved and come up with a recommended corrective action to managment if neccessary. Are there any?

Howard, Melissa, Bville HELP!!!! Does this apply to FDIC regulated Banks? Please explain the background of the Federal preemption. I can't understand this for some reason.

Does an OCC-regulated bank have a prohibition on late charges before 15 days?

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Does an OCC-regulated bank have a prohibition on late charges before 15 days?

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No. This is governed by the state laws.