DocMagic Late Fee Matrix and Updates

Written by Renee Smith Cleary

At DocMagic, we pride ourselves on our superior compliance process. To better accommodate our customers' needs and meet investors' requirements, effective November 1, 2005, we're making changes to our default late fee matrix for first and junior lien loans.1 Note that the current fees are not out of compliance -- most of the states where changes have been made allow a "reasonable" or "agreed upon" fee. As many of our investors have shown a preference for the standard 5% late fee2, we're making some minor tweaks.

Here is the matrix: Default Late Fees Matrix.

As always, our flexible customization permits you to override these default values because your company or investor specific plans may have different requirements. To make changes to these default late fees for your account, email or call customer service at (800) 564-1362 before the November 1, 2005 effective date to retain the existing values or to make changes to your account.

All existing customization for late fees in your account will remain in place.

Regarding the third column in the attached matrix, the Late Fee Addendum to Promissory Note (LFAPN.MSC), is available upon request. This Addendum contains more detailed late fee information for first lien loans.

Renee Smith Cleary is Assistant General Counsel of Document Systems, Inc. and a member of its Compliance Department.

1 These are not necessarily the default late fees for HELOCs, which may be separately regulated under state law.
2 Per the Fannie May Selling Guide, IV, 201.01: "Late Charge Provision (04/11/00): The note for a conventional first mortgage must provide for the borrower to pay a 5% late charge on any installment that is not received by the 15th day after it is due. If state law does not allow a charge that high, the maximum amount that is allowed should be used. If the mortgage has a late charge of more than 5%, it will be acceptable as long as the amount assessed during the time we hold the mortgage does not exceed 5%. The late charge should be computed on the principal and interest (P&I) installment only, not on the full monthly payment (PITI). This same late charge policy applies for an RHS-guaranteed mortgage that is closed on our conventional mortgage instruments."