Caliber Home Loans fined for overcharging clients

A California regulator is fining the defunct Caliber Home Loans $1.8 million for overcharging borrowers, an issue stemming from an examination almost a decade ago. 

The former lender, which was purchased by Newrez in 2021, has also refunded over $550,000 to impacted California borrowers, according to a press release Monday. The California Department of Financial Protection and Innovation also revoked Caliber's state origination licenses as part of the $2.3 million total settlement. 

"This penalty holds Caliber accountable and returns interest to California borrowers," said DPFI Commissioner KC Mohseni in a press release. "It is an example of DFPI's strong regulatory oversight in California's mortgage industry and its commitment to protect California consumers." 

States have steadily ramped up industry enforcement this year with the Consumer Financial Protection Bureau in limbo. The California fine follows a $2 million Massachusetts settlement with a servicer earlier this month, and various other laws and rulemakings.

It's unclear if the settlement funds are coming out of Newrez's coffers. Neither an attorney for Caliber named in the settlement, nor a spokesperson for Newrez parent Rithm Capital responded to immediate requests for comment Monday afternoon. 

What did Caliber Home Loans do?

In a 2016 examination California regulators found Caliber improperly charged borrowers excess per diem interest for more than 1 day prior to the disbursement of loan proceeds, according to the settlement. The DFPI ordered Caliber to self-audit its per-diem charges in 2019, and the originator found it overcharged 4,912 loans between 2012 and 2019 by a combined $550,316.46.

The company has made refunds on those loans including 10% interest per annum, according to the state. Caliber also failed to establish a custodial account for borrowers' trust funds, but corrected that issue before the exam ended in 2018. Another 2020 examination found five more borrowers whom Caliber overcharged per diem interest.

The lender reached an agreement with regulators before a trial was set to begin next week, the settlement stated. Separately in 2020, Caliber agreed to provide $17 million in mortgage loan forgiveness to New York customers after the New York attorney general accused the firm of placing customers in unfair, interest-only loan modifications. 

Caliber's origination licenses across the country expired in 2024, according to Nationwide Multistate Licensing System records. New Residential paid $1.67 billion to acquire Caliber from private equity firm Lone Star Funds in April 2021. Six months earlier, Caliber announced it was delaying an initial public offering, during the height of the refinance boom. 

The shop was primarily a retail lender, although it had a mix of direct-to-consumer, correspondent and wholesale business. It generated $3.5 billion in origination volume in 2023 and a massive $71.4 billion in 2021, according to Home Mortgage Disclosure Act data.