A late fee can be charged if it does not exceed what percentage of the amount past due?

• A. 2%
• B. 4%
• C. 5%
• D. 10%

Answer: (B)

In North Carolina, the law specifies that late fees for residential mortgage loans cannot exceed 4% of the amount past due. This regulation is designed to protect borrowers from excessively high penalties that could arise from late payments, ensuring that late fees remain reasonable and manageable.

The limit is set to allow lenders to recoup the costs associated with late payments without imposing severe financial burdens on borrowers. By adhering to this guideline, lenders can maintain a fair and equitable practice regarding late fees. This makes 4% the correct answer as it is the maximum percentage allowed by law for late fees, distinguishing it from other options which exceed this limit.