How is the limit on the late fee determined by North Carolina law?

In North Carolina, the limit on late fees for mortgage payments is determined by a percentage of the amount that is past due. This means that the late fee is calculated based on how much of the payment was missed rather than on broader factors such as the total loan amount, the specific payment schedule, or the consumer's credit score.

This approach ensures that the late fee is proportional to the amount owed, maintaining fairness for the borrower. It prevents excessively high fees that would not align with the actual missed payment, providing a more reasonable consequence for late payments. By establishing the fee as a percentage, it also means that larger missed payments will incur larger fees, which can help incentivize timely payments without imposing overly punitive charges on borrowers who may be struggling.