On September 30, the California DFPI entered into a consent order with a licensed residential mortgage lender and servicer to resolve allegations that it improperly overcharged per diem interest, in violation of the California Residential Mortgage Lending Act (CRMLA) and the California Civil Code. According to the order, a DFPI examination covering June 2018 through June 2021 found several CRMLA violations, including per diem interest overcharges, and a subsequent examination covering July 2021 through June 2024 identified a “repeat per diem violation.” The order stated that the lender has refunded the overcharged amounts with 10 percent annual interest and that it has made per diem refunds totaling $5,704.75. The lender neither admitted nor denied the findings, and the order noted that the lender fully cooperated with the examinations and the resolution of the matter.

Under the order, the lender must: (i) immediately stop violating the per diem interest provisions; (ii) pay a $79,200 penalty and $6,000 in investigative costs within 30 days of the order’s effective date; (iii) hire, at its own expense, an independent auditor reasonably acceptable to the DFPI to review its California loan originations from January 4, 2025, through 12 months after the effective date, with semiannual audit reports due by February 28, 2027, and August 31, 2027; (iv) mail refunds with 10 percent annual interest to any borrowers the audit identifies as overcharged within 10 business days of receiving the findings; (v) pay an additional $1,000 penalty for each new per diem overcharge the auditor finds; (vi) escheat any unclaimed refunds to California; and (vii) continue following policies and procedures the DFPI has reviewed and found satisfactory.