Thanks for asking.
The California code applicable to mortgage late fees is part of the
California Business and Professional Code, Section 10242.5:
10242.5. (a) A charge imposed for late payment of an installment
due on a loan secured by a mortgage or deed of trust on real property
shall not exceed an amount equal to 10 percent of the installment due,
except that a minimum charge of five dollars ($5) may be imposed when
the late charge permitted by this section would otherwise be less than
that minimum charge.
The charge permitted by this section may be assessed only as a
percentage of the increment of any installment due that is
attributable to principal and interest.
(b) No charge may be imposed more than once for the same late
payment of an installment. No late charge may be imposed on any
installment which is paid or tendered in full within 10 days after its
scheduled due date, even though an earlier maturing installment or a
late charge on an earlier installment may not have been paid in full.
For purposes of this subdivision, a payment or tender of payment made
within 10 days of a scheduled installment due date shall be deemed to
have been made or tendered for payment of that installment.
(c) A late-payment charge may be imposed pursuant to this
subdivision for the payment of any balloon payment more than 10 days
after the date due. The charge shall not exceed an amount equal to the
maximum late charge that could have been assessed with respect to the
largest single monthly installment previously due, other than the
balloon payment, multiplied by the sum of one plus the number of
months occurring since the late-payment charge began to accrue. For
purposes of this subdivision, "month" means the period between a
particular day of a calendar month and the same day of the next
calendar month.
California Law - California Business and Professions Code
http://www.leginfo.ca.gov/cgi-bin/calawquery?codesection=bpc&codebody=&
Chapter 3 - Real Estate Regulations Article 7 - Real Property Loans
http://www.leginfo.ca.gov/cgi-bin/displaycode?section=bpc&group=10001-11000&file=10240-10248.3
The relevant point would of course be (b), however, this is where the
terms of your individual mortgage will determine what is, indeed, a
legal late fee. The payment and arrears definitions will explain
exactly how payments are applied, in what order, and outline the fees
and interest charged on late payments.
Depending upon the terms of your contract, your lender may be able to:
a) charge continuing interest on the late payment amount, until that
amount has been paid, and/or
b) depending on the specific terms of the loan agreement, may apply
each payment retroactively, to the previously due amount, i.e. apply
the payment made on payment #22 to the balances due on payment #21,
(the missed payment), payment #23 to payment #22, etc., which would
thereby incur a new late fee each month.
The small print: Google Answers Terms of Service define our services
as "Not Professional Advice. Information provided via the Services is
not intended to substitute for informed professional medical,
psychiatric, psychological, tax, legal, investment, accounting, or
other professional advice. If you submit a question or comment on such
a topic, we will assume you are interested in soliciting and receiving
or giving general information rather than professional advice. You
should bear in mind that the applicability of such general information
might vary substantially in different states and according to the
individual factual circumstances surrounding a particular question or
comment. Accordingly, if you desire or require professional advice,
please consult a qualified provider who is licensed in your state or
country."
ADDITIONAL BACKGROUND
**********************************************************************
Legislative History of Business & Professions Code 10242.5
http://www.hands.org/foxhounds/_images/latefees.pdf
(.pdf document, pages 7-8)
California Department of Real Estate
Pertinent Excerpts from California Real Estate Code (.pdf)
http://www.dre.ca.gov/relaw_pdf/Excerpts.pdf
**********************************************************************
Google search terms:
california "mortgage late fees"
Should you have any questions about the material or links provided,
please, feel free to ask.
--larre |
Clarification of Answer by
larre-ga
on
25 Apr 2003 23:54 PDT
Certainly. I apologize for not tracing the chain in more detail.
The search results led me to HTML version of the second item,
"[PDF]Background
File Format: PDF/Adobe Acrobat - View as HTML
... Counties), introduced SB 304, which, among other things, limited
mortgage late fees
to 10 ... Western Center on Law and Poverty, and the California Trial
Lawyers. ...
www.hands.org/foxhounds/_images/latefees.pdf - Similar pages "
That page offered an excerpt of the relevant code, giving me a
headstart in finding the exact Code section, which I looked up in the
State of California's Legal Info section. While I was there, I read
through the California Real Estate Department site, reviewed the
related statutes and codes, and located the link to the single .pdf
document that contains those excerpts. Searches on FindLaw, and Lexis
located no new information to contradict my first findings. All items
examined, regardless of state, indicated that the applicability of
late fees is dependent upon how the terms of the mortgage are written
(within individual state laws) and how definitions of the terms as
well as the method by which payments are applied according to state
laws.
I included only the successful search terms.
--larre
|
