Michigan-based wholesale mortgage lender United Shore Financial Services will pay $1.4 million to settle allegations brought by the California Department of Business Oversight (DBO) that it overcharged interest on thousands of loans from 2011 to 2014.
California law prohibits lenders from charging interest on mortgages prior to the business day that immediately precedes the day the loan is funded. The California DBO says it discovered through examinations that United Shore started charging interest on some loans sooner than it was allowed to under state law.
“I’m pleased we have reached this agreement with United Shore,” says Jan Lynn Owen, commissioner of the California DBO, in a statement. “It compensates borrowers for the financial harm they suffered and requires the firm to continue following improved policies and procedures designed to prevent this from happening again.”
The settlement includes $293,127 of refunds already provided by United Shore to about 3,400 borrowers.
The company will pay restitution to additional borrowers based on the results of self-audits required by the settlement that will cover loans made from June 2015 through February 2018, the California DBO says in a release.
The settlement also requires United Shore to pay $1.1 million in penalties for the interest overcharges already identified, plus another $125 for each additional violation identified by the self-audits.
In 2015, United Shore originated 13,063 mortgages in California with a combined principal of $4.4 billion, according to the firm’s annual report filed with the DBO.