Late charges are a common issue for lenders, especially in California, and many are confused as to how to properly handle them. This article provides a comprehensive overview on the topic, making clear the requirements and regulations that should be followed.

Most notably, the article states that lenders should include a 15 percent late charge with a 5-day grace period in loan documents, or a late charge on the entire principal balance if the maturity balloon payment is not paid. It further clarifies that late charge fees should not be confused with prepayment penalties. Additionally, there are various exemptions to consider, including those for loans secured by mobile homes, those made to non-residential entities, and those for qualified disabled veterans.

Important Elements:
• 15 percent late charge with a 5-day grace period in loan documents
• Late charge fee should not be mistaken for prepayment penalty
•Various exemptions such as loans secured by mobile homes, non-residential entities, qualified disabled veterans

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