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Was it disclosed in the loan agreement that late fees would be charged?.
Were some of the payments actually late and paid without the late fees?
How old are the late fee charges?
Ok, if the fees were disclosed and agreed to by the borrower when taking out the loan, and they did in fact have late payments where the fees were not included, then the lender would have legal grounds to demand them before releasing the loan.
However, if a late fee was over 5 years old, then it would be unenforceable under NE law as the statute of limitations is only 5 years for a breach of contract action. So anything older than 5 years would be unenforceable.