The North Carolina Commissioner of Banks on Tuesday announced that the mortgage affiliate of Ryland Homes, Ryland Mortgage, has agreed to modify its lending practices and pay rebates and a civil penalty in connection with alleged overcharges on mortgage fees.

According to the commissioner, Ryland has agreed to refund North Carolina homeowners $220,851 and pay a penalty of $161,000 to the state. The commissioner's office said it believed Ryland charged some homebuyers closing costs that exceeded the legal limits in North Carolina. Ryland Mortgage did not admit to any wrong-doing, but agreed to make refunds averaging $250 each to approximately 850 homebuyers.

Ryland disagrees with the commissioner's assessment. "The majority of the closing costs at issue were paid by Ryland Homes as a legal seller contribution, so we do not believe that any North Carolina homebuyers were harmed or overcharged. To remove any concerns, we are refunding these costs to the borrowers," a company spokesperson said in a prepared statement.

The statement continued, "We settled these claims out of a desire to seek a resolution and to avoid the expense of litigation. We also wanted to use this as an opportunity to reaffirm to our borrowers that they're being treated fairly and honestly. Ryland Mortgage has taken a leadership role and gone the extra mile to adopt more stringent disclosure and appraisal measures than are required by law."

According to Ryland, the company has implemented the following policy at its communities nationwide:

"* We promise our customers that rates and fees on Ryland Mortgage loans will not exceed general mortgage and industry standards.

* We guarantee that the incentives we offer are true incentives, meaning they are actual discounts from the market price of the home.

* We extensively disclose to our borrowers which incentives they receive are tied to the use of Ryland Mortgage and that they have the freedom to shop around to determine that they are receiving the best loan and service.

* We use independent appraisers in each Ryland Homes community."