WaMu Sub Sued for Subprime Overcharging

The California Department of Corporations in Sacramento has filed a $9 million lawsuit against Long Beach Mortgage Co., a wholly owned subsidiary of Washington Mutual, for allegedly continuing to charge subprime borrowers unlawful interest after being warned years ago that its practices violate state law.The suit, filed in the Superior Court of Sacramento County, says Long Beach admitted in 1999 that it had charged excess interest on nearly 24% of these loans, for an overcharge of more than $625,000, and agreed to fix the problem. Borrowers were allegedly overcharged amounts ranging from $4.19 to $3,248.24. Two years later, the department concluded that Long Beach was still overcharging its borrowers by initiating interest charges on mortgage loans prior to the time allowed by law. Under California law, mortgage lenders may not begin charging interest on a loan until one day before the loan closes. In an e-mailed statement, WaMu said it couldn't comment on the litigation, but that Long Beach "is committed to adhering to our responsible mortgage lending principles." The department can be found on the Web at http://www.corp.ca.gov, and Long Beach can be found at http://www.longbeachmortgage.com.