OLYMPIA, Wash. -- The state will revoke the license of Paramount Equity Mortgage, Inc. due to its deceptive lending practices, the Department of Financial Institutions announced on Tuesday.

The department, after filing charges against the company on Tuesday, said it has fined the California-based firm $500,000 and required restitution for Washington borrowers.

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.

The state alleges Paramount engaged in 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.

Paramount is also accused of conducting a deceptive advertising campaign, the documents state.

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.

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.

The charging papers name the firm, as well as Hayes, its president, Mathew J. Dawson, broker, and John J. Walker, chief financial officer. All three men own equal shares of the company.

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.

Also, in addition to the $500,000 fine and the restitution payments, the state has 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."

Paramount could not be reached for comment.