What is the maximum late payment fee allowed on a high-cost loan under the HLPA?

The maximum late payment fee allowed on a high-cost loan under the Home Loan Protection Act (HLPA) is set at 3% of the past-due amount. This regulation is designed to protect consumers from excessively high fees that can make repayment more challenging. By limiting the late payment fee to this specific percentage, the HLPA aims to strike a balance between allowing lenders to impose reasonable penalties for late payments while also safeguarding borrowers from potentially predatory lending practices.

In contrast, options depicting lower late payment fees do not align with the legal framework provided by the HLPA, which recognizes higher risks associated with high-cost loans. This is crucial because higher late fees could exacerbate the financial strain on borrowers already in a precarious financial situation. Understanding this maximum is important for both borrowers and lenders in maintaining compliance with Rhode Island mortgage regulations.