CA DFPI Settles with Mortgage Lender/Servicer Regarding Per Diem Interest Overcharges

The California Department of Financial Protection and Innovation (DFPI) recently settled with a former mortgage lender and servicer after repeatedly finding that the company charged excess per diem interest.  The company was examined in 2016, and the DFPI found that it (i) failed to establish a custodial account for borrowers’ trust funds; (ii) failed to reconcile its escrow liability ledger monthly; and (iii) overcharged borrowers per diem interest in excess of one day prior to the disbursement of loan proceeds. 

In 2019, the DFPI required the company to self-audit its per diem interest charges during the prior seven years.  The self-audit found 4,912 loans with overcharged per diem interest, causing the company to issue refunds to borrowers totaling approximately $550,000. 

The company was again examined in 2020, and the DFPI again found that it was overcharging borrowers per diem interest in violation of California law.  The settlement includes $1.8 million in administrative penalties, and the company surrendered its CRMLA and CFL licenses.