OLYMPIA – An examination conducted by the Department of Financial Institutions (DFI) reveals that Paramount Equity Mortgage, Inc. (Paramount), a licensed mortgage broker headquartered in California, has engaged in a number of deceptive lending practices. As a result of the findings, DFI has given notice that it intends to revoke Paramount's license to do business in Washington, fine the firm $500,000 and require restitution for Washington borrowers.
In a Statement of Charges issued July 21, 2008, Paramount is accused of charging and collecting unearned fees, charging consumers to buy down interest rates without actually reducing the rate, failing to make required disclosures and making state and federally-required disclosures in a deceptive manner.
Deb Bortner, Director of DFI's Division of Consumer Services, noted that deceptive fee disclosures are the basis for the revocation of the firm's license.
"Paramount failed to make proper disclosures in almost every loan we reviewed," Bortner said. "Washington has many licensed mortgage brokers who comply with the law. In today's market, we simply do not need a mortgage broker engaged in deceptive conduct doing business in this state."
Paramount, which acts as both a mortgage broker and as a mortgage banker, made more than 1,700 mortgage loans to Washington borrowers in 2007, collecting more than $8.7 million in fees.
The Statement of Charges also alleges that Paramount engaged in a deceptive advertising campaign.
"Washington residents are probably familiar with radio commercials featuring Hayes Barnard, Paramount's President," Bortner said. "Paramount advertised that their 'mortgage bank' offers consumers low rates, free appraisals and guarantees the lowest interest rates and fees. In fact, Paramount is not a bank, the fees they charge more than covers the cost of the supposedly 'free' appraisal, and their guarantee of the lowest rates and fees cannot be substantiated."
DFI's investigation into Paramount's fee disclosure and advertising practices continues. Borrowers who believe they have been harmed through dealings with Paramount should file a complaint with DFI.
The Statement of Charges names Paramount Equity Mortgage, Inc., as well as its owners: Hayden D. "Hayes" Barnard, president and 1/3 owner; Mathew J. "Matt" Dawson, designated broker and 1/3 owner; and John J. "Jason" Walker, chief financial officer and 1/3 owner. Paramount, with a main office located in Roseville, Calif., has Washington-licensed branch locations in Bellevue, Wash., Granite Bay, Calif. and Lake Oswego, Ore.
The Statement of Charges gives notice DFI intends to issue an order requiring:
Paramount's Mortgage Broker license, including the licenses of the three Washington-licensed branch offices, be revoked;
Matthew J. Dawson's Loan Originator license be revoked;
Respondents jointly and severally identify and pay restitution to any applicant or borrower harmed by their violations of the Mortgage Broker Practices Act;
Respondents jointly and severally pay a fine of $500,000;
Respondents jointly and severally pay the examination costs of $3,366.51; and
Respondents jointly and severally pay an investigation fee of at least $6,200.
All four respondents have the right to request a hearing on the charges.