Question:

How are late payment penalties regulated?

Answer:

By law, late payment penalties have to be disclosed on the mortgage agreement. The grace period for regular mortgage payment plans is usually 15 days; with biweekly mortgage plans this is usually 10 days.

Grace period is the time when late payments can be paid off and no penalty will be charged.

Since borrowers have reported that a singled default and late fees imposed on this default caused the payments in succession to be considered late, thus resulting in hefty fees for the borrower, legislation is now provided to state clearly that late fees and interest and the failure to cover them in full do not incur late fees on properly made normal mortgage payments after the default.

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