Under Iowa Code Ann. § 537.2502(1)(b) through (3), an interest-bearing consumer credit transaction (e.g. a junior lien mortgage loan, the principal amount of which is equal to or less than the threshold amount set forth under 12 CFR § 1026.3(b)(1) and its associated Official Staff Commentaries) limits the amount of an assessed late charge to 5% of the unpaid amount of the installment, not to exceed $30.
Our Late Fee Defaults in ConformX are properly configured for such a restriction (with the caveat that any junior lien loans considered to be a high-cost mortgage loan under Ibid. § 1026.32 are limited to 4%, per Ibid. § 1026.34[a]). However, upon a review of our defaults, it was discovered that there was no rule in place for junior lien loans which are not considered to be an “interest-bearing consumer credit transaction” (e.g. a junior lien exceeding the threshold amount), which left the late charge values for such loans blank by default.
We will be correcting this oversight by adding a rule for such loans (which will be the same as the current restriction for an interest-bearing consumer credit transaction, except there will be no maximum dollar amount restriction on the late charge). We strongly encourage clients to test this rule in Stage to determine that it will meet their needs.
This change is currently available for testing on Stage and will be pushed to Production on October 26, 2017. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584.