Three Maryland mortgage companies must refund about $246,000 in prepayment penalties charged to customers statewide in violation of a 2008 law, according to state financial regulators.
Litton Loan Servicing and Saxon Mortgage Services have returned $71,000 collected from 160 Maryland consumers, and Bayview Loan Servicing refunded $104,000 to 40 Marylanders, according to the state Department of Labor, Licensing and Regulation.
The violations were discovered during compliance examinations conducted by the Office of the Commissioner of Financial Regulation.
Mortgage prepayments help reduce the amount of interest paid to the lender. Some lenders include prepayment penalties in their contracts. Under a 2008 Maryland law, prepayment penalties are prohibited for Maryland residential mortgages.
State regulators only have licensing and examination authority over independent mortgage servicers, not federally chartered banks or thrifts, according to DLLR.