What law prohibits a loan servicer from charging a late fee within 60 days of receiving a transferred loan?

The Real Estate Settlement Procedures Act (RESPA) is the law that explicitly addresses the issue of loan servicers charging late fees after a loan has been transferred. RESPA aims to ensure that consumers are informed about the costs associated with the settlement process and requires loan servicers to adhere to certain practices when handling transferred loans.

One of the key provisions of RESPA is that it prevents a servicer from imposing a late fee on payments made within 60 days of receiving the loan transfer, protecting consumers from being penalized during the transition period. This provision helps ensure that borrowers are not unfairly charged for payments that were made on time according to the terms of their original loan, as ongoing changes in servicer management can sometimes lead to confusion or delays in processing payments.

Understanding this provision is essential for mortgage loan officers, as it reflects the regulatory environment surrounding mortgage servicing and the protections afforded to borrowers under federal law.