A California court of appeal muddied the legal landscape on mortgage late fees by making banks subject to a late fee restriction statute in Business & Professions Code Section 10242.5 that explicitly only applies to real estate/loan brokers.Banks are already subject to a similar but not identical statute in Civil Code Section 2954.4, and the court’s ruling would subject banks in some circumstances to both. In Akopyan v.Wells Fargo Home Finance Inc., the court also held that the defendants in the case—both operating under federal charters—were not subject to the B&P Code provision because of federal preemption, but the decision still stands as a trap for state chartered banks that either fund loans originated by loan brokers or acquire broker-originated loans. If you have any questions, please contact CBA’s SVP, General Counsel Leland Chan at lchan@calbankers.com.