Based on recent requests, we will be updating the Late Fee Percentage defaults to accommodate the processing of High Cost Loans (HCL), which are defined in 12 CFR § 1026.32(a)(1). Concerning HCL late charges, § 1026.34(a)(8)(i) states that:
“Any late payment charge imposed in connection with a high-cost mortgage must be specifically permitted by the terms of the loan contract or open-end credit agreement and may not exceed 4 percent of the amount of the payment past due. No such charge may be imposed more than once for a single late payment.”
We will also be updating the HCL late fee percentage for Rhode Island, due to Rhode Island General Law §34-25.2-6(k), which states that:
“A creditor shall not make available a high-cost home loan that provides for a late payment fee except as follows:
- The late payment fee shall not be in excess of three percent (3%) of the amount of the payment past due.
- The late payment fee shall only be assessed for a payment past due for fifteen (15) days or more or ten (10) days or more in cases of bi-weekly mortgage payment arrangement.
- The late payment fee shall not be imposed more than once with respect to a single late payment. If a late payment fee is deducted from a payment made on the loan, and the deduction causes a subsequent default on a subsequent payment, no late payment fee may be imposed for the default.
- A creditor shall treat each payment as posted on the same business day as it was received.”
Additional Note: “Lights On” clients who modify conditions of the loan within ConformX after the initial import in an attempt to drop below the HCL threshold will need to ensure that they re-import the loan to set the appropriate late fee percentage based on the modified data.
These changes will be in effect on August 30, 2016. If you have any questions or concerns about these changes, or if you would like to test these changes on our Stage servers, please contact Client Support at 1.800.497.3584.