© 2018 VA Servicers Handbook - M26-4
VA allows servicers to assess late charges and certain other fees in accordance with VA guidelines. VA encourages consideration of waiving fees and charges when it will help a borrower prevent or resolve a delinquency. Late charges may be collected on any installment received more than 15 days after its due date, provided the loan instruments contain a provision for a late charge. In addition, the late installment must be paid before the late charge is collected. The late charge may not be:
(a) More than four percent of any installment (installment = principal + interest + taxes + insurance).
(b) Based on an amount greater than the past due installment.
(c) Collected from the escrow account or from an escrow surplus without prior approval of the borrower, in accordance with RESPA.
(d) Deducted from regular payments.
(e) A late charge discourages late payments only when the borrower is able to pay on time, but does not do so. If a borrower is cooperative, but unable to pay, or if collection of late charges could prevent a borrower from reinstating a delinquent account, consideration should be given to waiving the late charge.