The California Court of Appeals recently published an opinion holding prohibiting charging default interest on the entire unpaid principal balance following a monthly payment default. As you all know, default interest is valuable tool to offset the additional cost/loss resulting from the default and to encourage the borrower to remain current. As a result, the Honchariw decision was a huge blow to non-consumer lenders. 

Fortunately, there is a glimmer of hope on the horizon. The lender in Honchariw, FJM Private Mortgage Fund, filed a Petition for Review by the California Supreme Court. To bolster FJM’s efforts, the CMA’s General Counsel, Robert Finlay, and his team at Wright, Finlay & Zak, LLP filed this Amicus Letter in support of the Petition for Review. Robert’s firm was also able to get the Mortgage Bankers Association, California Mortgage Bankers Association, National Private Lenders Association and American Association of Private Lenders to join the Amicus efforts. We hope to have a decision in the next 30-60 days. If granted, the CA Supreme Court will set a briefing schedule, where we will have an opportunity to brief the substantive issues. 

CLICK HERE for a copy of the Amicus Letter. If you have any questions on the decision, its impact on a particular loan or whether you should revise your loan documents to bolster your ability to charge default interest, please feel free to reach out to Robert Finlay at or Michelle Rodriguez at

Thank you!

T. Robert Finlay, Esq. (Licensed in CA only) Partner | Wright, Finlay & Zak, LLP