Nationstar Mortgage (NYSE: NSM) this week agreed to pay more than $1 million after the forward and reverse servicer illegally charged borrowers inspection fees.

The Coppell, Texas-based Nationstar — which services Home Equity Conversion Mortgages through its Champion Mortgage arm — passed the cost of property inspections associated with reverse mortgage loans in default directly to consumers through February 2016, according to the office of Maryland attorney general Brian Frosh.

That’s against the law in Maryland, which requires servicers to cover those costs themselves. Nationstar, which now offers its forward mortgage products and services under the Mr. Cooper brand name, similarly charged forward mortgage borrowers for property inspections through January 2014, Frosh’s office claimed.

“These inspection charges violate state law,” Frosh, a Democrat, said in a statement announcing the settlement. “They were performed for the benefit of the lenders, not the benefit of the homeowners. We are pleased that the victims of the illegal charges will be made whole.”

Under the terms of Nationstar’s agreement with the state, the servicer will refund consumers $260,000 in fees; Nationstar already returned more than $820,000 in inspection fees as part of the state Consumer Protection Division’s investigation into its practices. The servicer must also pay almost $500,000 in penalties to the Consumer Protection Division, along with $10,000 in costs — while also agreeing never to collect inspection fees going forward.

The deal includes a concurrent memorandum of understanding with Maryland’s commissioner of financial regulation.

Nationstar earlier this year merged with WMIH Corp., the successor firm to former banking giant Washington Mutual, Inc., in a nearly $4 billion deal.

Written by Alex Spanko