SEATTLE -- Paramount Equity Mortgage, Inc. on Wednesday called the state's charges against the company "completely unjustified."

On Tuesday the Washington Department of Financial Institutions filed charges against the company for a number of deceptive lending practices, including 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, the department said Tuesday.

Paramount was also charged with conducting a deceptive advertising campaign.

Deb Bortner, director of DFI's Division of Consumer Services, said the allegation refers to the radio commercials featuring Paramount's President Hayes Barnard.

"Paramount advertised that their 'mortgage bank' offers consumers low rates, free appraisals and guarantees the lowest interest rates and fees," she said. "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."

Bortner added that she doesn't believe any mortgage firm could substantiate that their fees are the lowest and therefore, they're not allowed to make such assertions in their advertisements.

Paramount, which is headquartered in Roseville, Calif., has three other branches that operate under a Washington license. Those offices, which are are located in Bellevue, Wash., Granite Bay, Calif. and Lake Oswego, Ore., will have their licenses revoked, according to the state.

On Wednesday, Michele Magee, Paramount's vice president of operations, released a statement on the charges.

She said after reviewing the allegations, "We believe these allegations are completely unjustified and look forward to defending ourselves against all charges. Once we have the opportunity to present the facts of our case, we're confident we'll be exonerated.

"In our industry, we routinely go through multiple state and federal audits and exams. And today, we passed them all with flying colors. There's no reason to believe the state of Washington should be any different," McGee said. (Listen to the entire statement
here.)

In 2007, Paramount issued more than 1,700 mortgage loans to borrowers in Washington state and collected more than $8.7 million in fees, the state said.

In addition to revoking the firm's mortgage broker license as well as the licenses of the three Washington-based offices, the state also intends to revoke Dawson's loan originator license.

The state fined the California-based firm $500,000 and required restitution for Washington borrowers. Paramount was also ordered the owner to pay for the examination costs which total $3,366.51, and the investigation fee of $6,200.

"Many times we negotiate these things," said Bortner. "The most important part when we bring an order like this is that people get their money back if they weren't treated fairly."