Alert March 11, 2008

Interest Calculations Do Not Violate California Unfair Competition Law

A California appeals court has affirmed summary judgment for Wells Fargo in an action challenging the practice of calculating interest charges on mortgage loans based on a uniform, 30.4-day monthly unit rather than the actual number of days in the month. Plaintiff alleged the practice violated California’s Unfair Competition Law. The court found the lender’s actions did not threaten competition because nearly every mortgage lender uses the same 30.4-day calculation method. The court also found that uniform monthly calculations allow for efficient sales in the secondary mortgage market, which benefits consumers and competition and outweighs the insubstantial injury, if any, on plaintiff. Further, the court concluded that, because the lender “realized no net monetary benefit by using the uniform month,” the 30.4-day method did not violate the UCL. Click here for a copy of Puentes v. Wells Fargo Home Mortgage, Inc., No. D049800, (Cal. 4th App. Dist. Feb. 28, 2008).