Senate approves cap and notice rules for trust-deed foreclosure attorney fees after hours of debate

The Utah State Senate passed Senate Bill 32 on third reading after an extended debate over attorney fees in trustee-foreclosure proceedings. The bill, presented by Senator Tanner Pace, aims to limit fees charged in many nonjudicial foreclosures and to protect owner-occupants of small residential properties by imposing statutory limits and procedural safeguards.

Senator Tanner Pace, sponsor of SB 32, framed the measure as a consumer-protection bill intended to rein in what he described as excessive attorney charges in routine trustee-foreclosure cases. Pace argued that reinstituting a cap would protect vulnerable homeowners and recover the original intent of the Trust Deed Act. "This bill's meant to handle administrative foreclosures, and it was meant to be low cost foreclosures," Pace said during floor remarks explaining his concerns about fees that can exceed the underlying delinquent amounts.

Opponents and some committee members argued the issue is complex and cautioned against an arbitrary ceiling on fees. Senator Lyle Hilliard offered a substitute amendment that removed a fixed cap in favor of reasonable attorney fees but added a requirement that attorneys or servicers send a certified 30-day notice to the borrower’s last known address and to the occupant before attorney fees could be charged. Hilliard said the notice provides an opportunity to cure inadvertent delinquencies without imposing fees, while preserving flexibility to address more complex situations.

Witnesses invited in a Committee of the Whole illustrated why senators were divided. A Salt Lake community-action representative recounted client cases where families paid hundreds or thousands of dollars in legal fees to reinstate mortgages; the witness described typical first-contact fees ranging from about $200 to $850 depending on loan type. Lauren Rano, an attorney who represents lenders and servicers, testified that federal insurers such as FHA and VA place caps on reimbursable attorney fees (Rano cited a current FHA local reimbursement cap around $425 and VA around $350), arguing those market references undercut some high-fee claims.

Floor debate considered competing policy trade-offs: proponents warned that without statutory controls poor homeowners face unpredictable, high fees, while opponents warned that strict caps could raise mortgage costs for all borrowers or drive lenders to alter market behavior. Senator Butler, who sponsored the original trust-deed approach decades ago, urged balancing the market's interests and consumer protections and supported the committee compromise.

After motions and several failed amendments, the Senate called the question. The clerk recorded SB 32 as receiving 17 ayes and 7 noes with 5 senators absent. The bill passed and was placed on the third‑reading calendar for subsequent processing.

The next procedural step is third-reading scheduling and transmittal according to legislative rules. The Senate record shows the committee testimony and floor colloquy that framed the final compromise; the bill’s text (as amended) specifies the notice requirement and the fee limitations adopted by the chamber.