A borrower in Pasadena, California, has a deed of trust with a late payment clause. The borrower's payment is due on the 1st of each month. Under California law, when can the lender charge a late fee on a residential loan?
Correct Answer
D) After a grace period, typically 10-15 days after the due date as specified in the deed of trust
Most California residential deeds of trust include a grace period (typically 10-15 days) before a late fee can be charged. California Civil Code §2954.4 limits late charges on single-family residential loans, and the fee cannot be assessed until after the contractual grace period has expired.
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Related Concepts
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
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