Servicers love to quote inflated payoffs packed with junk fees. California law requires them to give you an accurate breakdown within 4 business days—or face liability. Here's how to demand it.
To reinstate your loan (stop foreclosure by catching up on payments), you need to know exactly how much to pay. Servicers routinely pad this amount with inflated fees, phantom charges, and "estimated" costs that don't exist.
Under California Civil Code § 2943, you have the right to demand a payoff demand statement (also called a beneficiary statement or reinstatement quote), and the servicer must provide it within 4 business days.
Watch for: excessive late fees, property inspection fees ($15-50 each, sometimes monthly), BPO fees ($150-400), "corporate advances," unexplained attorney fees, and inflated escrow estimates. Many of these are challengeable.
The request must be in writing. While you can use the servicer's form, I recommend sending your own demand letter via certified mail to create a paper trail and trigger the statutory deadline.
You're entitled to one free statement per 12 months (CC § 2943(e)(2)). After that, they can charge up to $60. If the first quote seems inflated, request an itemized breakdown and challenge specific fees.
Servicers make mistakes—sometimes innocent, often not. Here's your audit checklist:
Check your note—most limit late fees to 5% of the monthly payment. Multiple late fees per month are usually improper.
Monthly drive-by inspections at $50 each add up. More than one per month or before you're significantly delinquent is questionable.
Broker Price Opinions ($150-400) should only be ordered when necessary, not routinely.
Flat "attorney fees" of $1,500+ with no breakdown are suspect. Request itemized invoices.
Force-placed insurance is often 10x market rate. If you had coverage, challenge it.
Partial payments may be sitting in "suspense" not credited to your loan. Demand an accounting.
Send this letter via certified mail, return receipt requested. Keep a copy for your records.
When servicers miss the 4-day deadline, they're liable for $300 in statutory damages under CC § 2943(c). But more importantly, their failure creates leverage:
If they don't respond within 4 days, don't just wait. Send a follow-up letter noting the violation and threatening a DFPI complaint. Servicers often respond when they realize you know your rights.
Reinstatement means catching up on missed payments plus fees to return the loan to current status. You keep making regular payments afterward.
Payoff means paying the entire loan balance to eliminate the debt completely. This is what you'd do when selling or refinancing.
Under CC § 2943, you can request either type of statement. For stopping foreclosure, you typically want the reinstatement amount (much smaller than full payoff).
Under CC § 2943(b)(3), the payoff demand statement must specify a date through which it's valid, which cannot be less than 21 days from the date the statement is prepared.
If you're close to the deadline, request a new quote or use the per diem rate to calculate additional interest.
Within the validity period, they generally cannot add fees not disclosed in the quote. If they try to demand more at closing, that may violate the statute.
However, if new expenses legitimately arise (like another monthly payment coming due), those would be additive. The quote should include a per diem rate so you can calculate additional interest.
Challenge them in writing. Under RESPA's Notice of Error procedures (12 CFR 1024.35), you can dispute fees you believe are improper.
Common challengeable fees include:
See my Unauthorized Fee Challenge guide.
Yes, but with conditions. Under CC § 2924c, you can reinstate up to 5 business days before the scheduled sale.
However, this right is limited:
Better to reinstate during the 90-day NOD period when you have an unconditional right.
I audit reinstatement quotes and challenge inflated charges. If your servicer is padding your payoff with junk fees, I can help you fight back and potentially reduce what you owe.