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Back to CMA Home   MANY LENDER OR TRUSTEE FEE SCHEDULES BASED UPON THE NEW STATUTORY TRUSTEE’S FEE LIMITS ARE ERRONEOUS.  ARE YOURS? By: Phillip M. Adleson, Esq. Adleson, Hess & Kelly, P.C. 577 Salmar Avenue, Second Floor Campbell, California 95008 408-341-0234 (voice)  408-341-0250 (fax) email: padleson@ahk-law.com Webpage: www.ahk-law.com After over 8 years without any statutory fee increase, the legislature passed and the Governor signed SB 958 [Ackerman 2001 Stats. Chapter 438], a CTA sponsored bill, that among other things, increased the maximum statutory trustee’s fees that can be charged in processing a nonjudicial foreclosure, effective January 1, 2002.[1] SB 958 modified California Civil Code §§ 2924c and 2924d.  These amendments created a system where the base fee is determined by whether or not the unpaid principal balance (UPB) is $150,000.00 or less, or over $150,000. Exactly as provided under the law that existed prior to January 1, 2002, a statutory percentage is added to the base fee to the extent the UPB exceeds certain amounts (e.g., $50,000, $150,000.00 and $500,000.00).  The percentage decreases when the UPB exceeds certain thresholds. There appears to be confusion primarily among lenders and trustees who may not be CTA members as to how the new law works.  As a result, a number of trustees and lenders are using inaccurate statutory trustee’s fee schedules or calculators.  It appears that no consumer has been harmed by these errors as they substantially underestimate the maximum permissible trustee’s fees.  However, trustees may have lost significant revenues from this error (depending on their individual pricing policy and agreements with beneficiaries.) Well in advance of January 1, 2002, CTA provided its members with numerous resources to educate members on the provisions of SB 958, including: (1) an article entitled “Legislation Raises Base Fee Caps And Clears Up 7-Day Postponement Rule” by Adleson/Soderberg, published in the CTA Newsletter sent to all CTA members;  (2) the Adleson/Soderberg article and fee calculator have been available on the CTA website since before the first of the year and is still available by clicking on “New Trustee’s Fee Calculator”, (3) at the October 17-19, 2001 CTA Annual Conference in Palm Springs (and in the materials provided at the Conference); and, (4) at CTA Chapter meetings.  The fee calculator has been handed out and made available to members through all these means. Some trustees and lenders believed there was a discrepancy between the fee calculator available on the CTA website and their own schedules and calculators.  These discrepancies can all be traced to fee schedules or calculators created by lenders or trustees based upon the “Legislative Counsel’s Digest” (i.e., summary at the beginning of the bill.)  The Legislative Counsel’s Digest is not law and it contains a typographical error, failing to reflect the actual text of the chaptered bill signed by the Governor.  Information Management employees at lenders and trustees attempting to program the SB 958 fee changes did so based solely upon the Legislative Counsel’s Digest and without actually reading the bill.  The typographical error in the Legislative Counsel’s Digest makes it appear that the additional percentages for level two are only added to the base fee when the UPB is over $150,000.00. However, based on the text of the actual chaptered bill, the additional percentages are applied in addition to the base fee to the amount of the UPB in excess of $50,000.00 (just as under prior law).  This discrepancy is evidenced where one is trying to determine the statutory maximum trustee’s fees based upon a UPB of $58,000.00.  To determine the maximum statutory trustee’s fee for a loan with a UPB of $58,000.00, the base fee determination is made based upon whether the UPB is $150,000.00 or less, but the additional percentages start at $50,000.00 just as they did under the old law.  With the misreading of the bill based upon the Legislative Counsel’s Digest, the maximum fees for levels 1, 2 and3 would be $290, $440 & $580.  Reading the bill correctly (i.e., based upon the text in the chaptered bill), the proper maximum fees should be $340, $505 and $580. The fee calculator that may be downloaded from the CTA website has always accurately reflected the provisions of SB 958.[2]   How does your statutory schedule match up? [1] All trustee’s fees are negotiable and established by agreement, subject to limitations on maximum trustee’s fees set forth in the Civil Code.  Nothing in this article is intended to suggest that any trustee should set its trustee’s fees at a particular amount, including the maximum permitted by statute. [2] If anyone discovers any discrepancy or anomaly with the fee calculator available on the CTA website, please contact the author.