Volume 01, Issue 02 – August 2013
Department of Business Oversight Announces Settlement with Mortgage Companies for Interest Overcharges
In August 2013, the California Department of Business Oversight reached settlements with two mortgage companies for illegally overcharging borrowers for interest before the disbursement of their loans and for other violations of the law. The Department reached settlements with Gateway Funding Diversified Mortgage Services, LP (doing business as Arlington Capital Mortgage) and Guidance Residential, LLC.
“The Department of Business Oversight enforces financial laws meant to protect Californians from unfair financial practices like excessive charges,” said Commissioner Jan Lynn Owen. “These settlements on behalf of unwary borrowers are an appropriate resolution of the unfortunate practices that occurred at Gateway and Guidance. They should also serve as a warning to other lenders to assure compliance with the law.”
As part of the settlements, both Gateway and Guidance have agreed to review all of their loan files to determine which borrowers were overcharged. Under California law, a residential mortgage lender is only permitted to charge borrowers one day of interest prior to disbursing the loan proceeds. A regulatory examination of the companies found that Gateway charged at least 20 California borrowers more than one day of interest and that Guidance had overcharged at least 77 customers.
Under the terms of the settlement, borrowers who were overcharged will have their excess interest refunded to them with 10-percent interest.
Borrowers who obtained a mortgage through Gateway Funding Diversified Mortgage Services, LP, Arlington Capital Mortgage, or Guidance Residential, LLC, are strongly encouraged to check their closing statements to ensure they were charged no more than one day of interest prior to the disbursement date of their loan proceeds. Those borrowers who believe they have been overcharged should provide the Department of Business Oversight a copy of their final closing statement and current contact information. They should send those documents to the Department of Business Oversight, 1515 K Street, Suite 200, Sacramento, CA 95814, Attention: Enforcement Unit.
Terms of the settlement agreements also require Gateway to pay $56,000 and Guidance to pay $77,000 in penalties to the Department and for both to agree to abide by the Department’s order to stop violating the law.
CFPB Remittance Transfer Rule Becomes Effective October 28, 2013
The Consumer Financial Protection Bureau (CFPB) Remittance Transfer Rule will become effective on October 28, 2013. For more information, please click here.
If a Money Transmitter licensee chooses to amend its currently approved receipts to include language that may be required by Regulation E, the licensee must submit its proposed revised receipt to DBO for approval prior to its first use in California. DBO licensees can use a single receipt for money received for transmission so long as the receipt complies with all of the disclosure requirements set forth in:
1. The California Money Transmission Act (Chapter 6, Division 1.2 of the California Financial Code); and
2. Regulation E (12 C.F.R. § 1005.31), including but not limited to “grouping,” “proximity,” “prominence and size,” and “segregation” requirements set forth in 12 CFR § 1005.31(c); including the “date available” regarding when funds will be available in the foreign country; and a statement about the rights of the sender regarding the resolution of errors and cancellation. (12 CFR § 1005.31(b)(2)(ii),(iv).).
For more information about the California receipt requirements, please visit the Department FAQ page on Money Transmitters.
Commercial Bank Activity
Acquisition of Control
OCB Bancorp, requests DBO’s approval to acquire control of Ojai Community Bank
BBCN Bank, Los Angeles, California, requests DFI’s approval to merge with The Foster Bank, Chicago, Illinois
Grandpoint Bank, Los Angeles, requests DBO’s approval to merge with Regents Bank, N.A., La Jolla
Wilshire State Bank, Los Angeles, requests DBO’s approval to merge with BankAsiana, Palisades Park, New Jersey
Purchase of Partial Business Unit
Cathay Bank, Los Angeles, California request DBO’s approval to acquire the Las Vegas, Nevada branch office of Nevada National Bank, Las Vegas, Nevada
Opus Bank, Irvine, requests DFI’s approval to acquire four branch offices of California Bank & Trust, San Diego
Change of Name
Chinatrust Bank (U.S.A.) to change its name to CTBC Bank Corp. U.S.A.
Credit Union Activity
Clearpath Federal Credit Union, Glendale, requests DBO’s approval to merge with Lithuanian Credit Union, Los Angeles
Credit Union of Southern California, Brea, requests DBO’s approval to merge with Firestone Financial Services Credit Union, Anaheim
One credit union received approval from DFI for a request for variance to sections of the California Code of Regulations during July 2013.
Premium Finance Company Activity
New Premium Finance Company
Alliance Premium Finance, Inc.
5315 Laurel Canyon Boulevard, Valley Village, Los Angeles County
Trust Company Activity
Acquisition of Control
Crowell/SPFHC Trust and Andrew E. Crowell, Trustee, requests DBO’s approval to acquire control of San Pasqual Fiduciary Trust Company
Foreign (Other Nation) Bank Activity
Change of Name
Chinatrust Commercial Bank, Ltd., to change its name to CTBC Bank Co., Ltd.
Money Transmitter Activity
New Money Transmitter Application for License
Skrill USA, Inc.
License Issued: 8/26/13
Bulletin for Month ended August 2013, issued pursuant to Financial Code section 376
The Monthly Bulletin is available without charge via e-mail. To subscribe, go to: https://dfpi.ca.gov/Resources/subscription.asp
1515 K Street, Suite 200
One Sansome Street, Suite 600
320 West 4th Street, Suite 750
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Department of Business Oversight Consumer Services Office – 1(866) 275-2677