Nationwide Mortgage Licensing System (NMLS) Practice Exam

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What is the late fee percentage for a VA loan?

3% of principal and interest
4% of principal and interest
5% of principal and interest
10% of principal and interest

The correct answer is: 4% of principal and interest

The late fee percentage for a VA loan is established at 4% of the principal and interest. This indicates that if a borrower fails to make their scheduled payment by the due date, they may incur a late fee that is calculated based on 4% of the amount due for principal and interest. This fee structure is significant as it helps to provide uniformity and clarity in the lending process for veterans. It ensures that borrowers understand the financial repercussions of late payments while also aligning with regulations that protect consumers. In contrast, higher late fee percentages, such as 5% or 10%, would generally not be reflective of the VA loan guidelines, promoting responsible borrowing practices and preventing excessive punitive fees that could potentially harm the borrower's financial situation.