April 5, 2016
by Rebecca B. Redmond
Sirote & Permutt, P.C. – USFN Member (Alabama)
FHA servicers and lenders: There’s another rule change. Under FHA’s reduced late fee cap, which became effective March 14, 2016, late charges for case numbers assigned on or after the rule’s effective date will be limited to four percent of principal and interest. Taxes and insurance can no longer be factored into late charge calculations.
This new cap on late fees — one of the many changes set forth in the recently revised FHA handbook (i.e., online FHA Single Family Housing Policy Handbook 4000.1) — is sure to add to the ever-increasing compliance costs for servicers as fees decrease. Meanwhile, pressure mounts on lenders to provide proper closing cost disclosures in light of this revised rule. Compliance is mandatory.
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