Michigan lender settles allegations it overcharged California borrowers
Mortgage lender and servicer United Shore Financial Services has agreed to pay at least $1.4 million to settle allegations it overcharged California borrowers for interest, a state regulator announced Monday.
The firm has already refunded more than $293,000 to thousands of borrowers and will dole out more if further overcharges are discovered through several required audits, the Department of Business Oversight said. The firm will also pay at least $1.1 million in fines to the department.
The settlement is the latest legal payout made by a company that originated more than $4 billion in loans in California in 2015.
Late last year, the Troy, Mich., lender agreed to pay $48 million to settle allegations made by the U.S. Department of Justice that it originated and underwrote FHA-insured loans that were risky and failed to meet federal requirements.
In the California case, the Department of Business Oversight alleged United Shore broke state law when it charged interest days before loan proceeds were disbursed.
In a statement, Department of Business Oversight Commissioner Jan Lynn Owen said the settlement “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.”
Mat Ishbia, chief executive of United Shore, said in a statement that the issues stemmed from escrow agents who couldn’t properly document when funds were disbursed for a minority of loans issued in California — a problem he said has been fixed.
“We didn’t benefit one penny and not one borrower was harmed,” he said in a statement. “We refunded borrowers [in the settlement] just to be safe.”
Tom Dresslar, a spokesman for the Department of Business Oversight, said, “it is absolutely false to say borrowers were not overcharged.”
“You don’t refund money to consumers just to be safe,” he said in an email. “You refund money to consumers because you overcharged them.”
The settlement covers loans made between August 2011 and February 2018, when the last required audit will be completed. For refunds already paid, consumers on average received $86, Dresslar said.
In November, the department announced a similar $1.6 million settlement with mortgage lender and servicer PrimeLending of Dallas.
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UPDATES:
2:10 p.m.: This article was updated to include comments from United Shore and a spokesman for the Department of Business Oversight.
This article was originally published at 12:25 p.m.
