PrimeLending has agreed to settle allegations that it overcharged interest to hundreds of California borrowers on new home loans they took out.
A pair of regulatory examinations conducted by the California
Department of Business Oversight uncovered the alleged actions by PrimeLending.
The Dallas-based subsidiary of Hilltop Holdings Inc. is accused by the state of violating the state’s statutory restriction on per diem interest.
“Under California law, lenders cannot start charging interest on mortgage loans prior to the business day that immediately precedes the day the loan proceeds are disbursed,” the department stated in an announcement Monday.
PrimeLending allegedly failed to adequately respond to the state when it notified the company on two occasions about the violations.
But after the department informed PrimeLending about a planned enforcement action to suspend its license, the lender started to fully cooperate in 2015.
In 2015, PrimeLending originated more than $13 billion in mortgages, including 5,498 loans for $1.96 billion in California.
The state said PrimeLending has agreed to a consent order to resolve the allegations of interest overcharges. The settlement will cost it $1.6 million, including a $1.3 million penalty and
$0.3 million in refunds already made.
