We are pleased to announce that our “Late Fee Matrix” and “Late Fee ConformX Matrix” have both been updated and are now available on our website at http://blog.docutechcorp.com/matrices.
Enhancements
The “Late Fee Legal Matrix” has been enhanced as follows:
- It includes a new column which provides a “high level” summary of what types of properties each late fee restriction applies to, as well as the occupancy requirements for such properties (with links to the laws which provide expanded and more precise definitions);
- It includes references to the formal title of the law(s) within which the restriction provisions appear in;
- Includes restrictions for Puerto Rico and Guam (note: document support for these two territories is limited); and
- Navigation of the document has been enhanced. By clicking the state abbreviations in any row, viewers will be sent back to the Table of Contents.
Different Purposes
Please note that the “Late Fee Matrix” contains a summary of each promulgated late fee restriction in each state and some territories, regardless of whether such restrictions are supported by ConformX. This Matrix is not a summary of our late fee defaults in ConformX; the “Late Fee ConformX Matrix” is.
Standard Late Fee Defaults
As a reminder, our “standard default” for late fees conforms with the late fee restrictions imposed by FNMA, FHLMC, FHA, VA, and RDi, as well as Federal law in regards to high cost mortgage loans (“HCL”; see 12 CFR § 1026.34[a][8]), by limiting the maximum percentages to either 4% (if FHA, VA, or HCL) or 5% (if non-HCL and either Conventional or RD), with no maximum or minimum dollar amounts. These standard defaults are deviated from if state law imposes:
- A more restrictive cap (e.g. in Massachusetts, the maximum percentage is 3% for all loans);
- A mandatory maximum dollar amount (e.g. in Indiana, junior lien consumer loans are subject to a $18.50 maximum late fee charge); or
- A mandatory minimum dollar amount (e.g. in Oklahoma, which has the only mandatory minimum, consumer loans are subject to a $5 minimum charge).
ConformX Late Fee Default Changes
Updates to our ConformX late fee defaults include:
- Restructuring the rules for Alaska as follows:
- Loans of ≤$10,000, with a loan term of ≤84 months (i.e. loans subject to so-called “Alaska Installment Loan Act”) have a maximum late fee percentage of 4 or 5% and a maximum dollar penalty of $15.
- Loans of ≤$10,000, but with a loan term >84 months have a maximum percentage of 4 or 5% (standard default).
- Loans between $10,000.01 – $25,000 (i.e. loans subject to the Alaska Small Loans Act) have a maximum percentage of 4 or 5%, with a maximum dollar penalty of $25.
- Loans of >$25,000 have a maximum percentage of 4 or 5% (standard default).
The difference between this and the current rules is the fact that loans of $10,000 or less, but with terms too long to make them subject to the “Alaska Installment Loan Act,” will be subject to the standard default rather than the Alaska Small Loans Act (“ASLA”) default. This is because the late fee restrictions under the ASLA only applies to licensees under this Act; loans of $10,000 or less not subject to the “Alaska Installment Loan Act” may also not be subject to the ASLA. Clients who are licensed under the ASLA may modify the defaults to make these types of loans subject to the ASLA’s $25 maximum dollar penalty.
- Removing the Florida Consumer Finance Act defaults and making all Florida loans subject to our standard defaults.
- Adding a new rule applicable to Illinois high risk home loans. While the standard defaults do consider whether a loan is a Federal HCL or not, the criteria for determining whether a loan is a “high risk home loan” or not is different under Illinois law than the Federal criteria for a HCL (see 815 Ill. Comp. Stat. Ann. 137/10). As such, an additional, different rule is required for these types of loans.
- For Indiana second lien loans, the maximum dollar penalty has been updated from $17.50 to $18.50.
- Applying the threshold amount set forth under 12 CFR § 1026.3(b) for an Iowa junior lien loan, to determine whether it is subject to the $15 maximum dollar penalty under Iowa Code Ann. §§ 537.2502(1) through (3) or not. See §§ 537.1301(12) through (15) & (47) and 537.2102 for details.
- Updating the maximum dollar penalty for consumer loans in Oklahoma from $23.00 to $24.50 (note: we are aware that this amount will increase to $25.00 on July 1, 2017).
- Similarly to Illinois, we are creating another, separate HCL rule for Rhode Island to cover “high-cost home loans” under R.I. Gen. Laws Ann. § 34-25.2-6(k).
- Creating new rules for junior lien loans in South Carolina, which imposes an $18.00 maximum dollar penalty (see S.C. Code Ann. § 37-3-203[1] & [2] for details).
These defaults will be pushed to production on the night of May 8, 2017 – but are available for testing on Stage right now. We highly recommend that clients test these defaults before they affect live loans and contact us if they experience any issues or wish to make any changes. If you have any questions or concerns about these changes, or wish to coordinate testing with an Account Manager, please contact Client Support at 1.800.497.3584.
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i See FNMA 2017 Selling Guide B8-3-02, FHLMC Single-Family Seller/Servicer Guide 4701.4, FHA Single Family Handbook 4000.1 III.A.3.d, VA Servicing Guide ch. 1.08, & RD HB-1-3555 ch. 17.2(B)