PrimeLending, a nonbank mortgage lender and servicer owned by PlainsCapital Bank, based in Dallas, will pay $1.6 million in penalties as part of a settlement with California regulators.
In addition to $1.3 million being paid to the state's Department of Business Oversight, PrimeLending has agreed to refund California residents $319,500 for interest overcharges.
"These interest overcharges are one of the most common violations we find in our regulatory examinations of mortgage lenders," said DBO Commissioner Jan Lynn Owen in a press release Monday.
"We will continue to aggressively fight this unlawful nickel-and-diming of California consumers. I'm pleased this settlement provides restitution to so many wronged borrowers."
The enforcement action resulted from regulatory examinations that discovered the Texas-based lender violated California's statutory restrictions on per-diem interest.
"We are pleased to have reached a resolution with the California Department of Business Oversight regarding per-diem interest collection activities within the State of California. PrimeLending cooperated fully with the DBO to quickly refund all impacted customers and to implement monitoring that adheres to California's statutory and procedural expectations," according to a statement issued by PrimeLending Monday.
However, California regulators indicated in their press release that PrimeLending didn't start to cooperate in 2015 until they "informed the company [DBO] planned to file an enforcement action to suspend the firm's license to conduct business in the state." PrimeLending declined to comment on the regulator's comments regarding cooperation.
As part of the $1.6 million settlement, Commissioner Owen has directed PrimeLending to conduct a new audit to determine if additional borrowers should be reimbursed for overcharges.
PrimeLending might have to reimburse more borrowers for overcharges and pay additional penalties if the independent auditor discovers more interest overcharges, according to the California regulator.
In 2015, PrimeLending originated 5,498 mortgages in California totaling nearly $2 billion.
