A: The late charge provision in a mortgage calls
for an additional charge if your payment is not
received by your lender when due or within a grace
The minimum grace period before a mortgage
encumbering a one-to-four unit, owner-occupied
residential property is delinquent is ten days after the
due date without receipt of the payment — even if no
agreed-to or a shorter grace period is stated.
If you fail to pay a late charge when demanded, it is not
a material breach of your mortgage. As a non-material
breach, the failure to pay a late charge alone is not
grounds for your lender to initiate foreclosure.
To be enforceable, the late charge may not be punitive
in amount, as in an effort to coerce timely payment.
The amount needs to be reasonably related to money
losses incurred by your lender due to the delinquency.
The late charge on any mortgage secured by an
owner-occupied single family residence (SFR) is
limited to the greater of:
• 6% of the delinquent principal and interest
Lenders give notice and make a demand for the late
charge by providing the borrower either:
• a billing statement or notice sent prior to each
payment’s due date stating the late charge
amount and the date on which it will be incurred;
• a written statement or notice of the late charge
amount sent concurrent with or within ten days
of mailing a notice to cure a delinquency.
For mortgages secured by a one-to-four unit principal
residence, the lender is not permitted to assess
more than one late charge per delinquent monthly
installment, no matter how many months the payment
remains delinquent. Additionally, the late charge may
only be charged on principal and interest payments,
not on impound amounts or unpaid late charges
Ed Wojtowicz, Sales Associate
CalBRE Lic# 01754533
Equity Plus Realty
Richard Cerda, Broker
CalBRE Lic# 00464898
Contact: (951) 323-6289