Mortgage Research Center LLC has agreed to pay approximately $604,000 in restitution to New York consumers after the state found that the company failed to refund credits that it offered to cover estimated closing costs.

Doing business as VAMortgage Center or Veterans United Home Loans, the company offered the credits to customers who agreed to a higher interest rate when the actual closing costs were lower than the estimated closing costs, the New York Department of Financial Services said in a release. Those cases resulted in a surplus lender credit.

The company did not adjust the interest rate downward, reduce the principal balances of the loan, lower the down payment, provide a cash refund, or pursue any other means to refund the surplus, the department said. An examination of the company turned up at least 322 cases for which refunds were not provided.

"While we appreciate Veterans United's willingness to make its customers whole, we emphasize that lenders must not take advantage of the moving parts of the loan origination process in order to obtain hidden profits at their customers' expense," Financial Services Superintendent Maria Vullo said in a statement.

Veterans United agreed to pay full restitution to affected customers, plus 9% interest, estimated restitution to consumers whose records have been lost, and a $500,000 penalty to the state. The company must ensure that future surplus lender credits are immediately returned to borrowers via cash payment or reduction in the principal balance of loans.