Prospect Mortgage Settles With Multi-State Mortgage Committee

Posted by Patrick Barnard on November 23, 2015 No Comments
Categories : Residential Mortgage

Prospect Mortgage will pay a $7.4 million penalty and about $2.8 million in restitution to settle allegations brought by the Multi-State Mortgage Committee (MMC), a consortium of 50 state mortgage regulators, that the company failed to disclose and substantiate fees charged to customers and paid to its affiliate, C2C Appraisal Services.

The alleged violations occurred between Oct. 1, 2010, and March 31, 2012, and were uncovered as the result of an investigation, MMC authorities say in a consent order.

‘Prospect's past practice of charging unsupported fees is unacceptable, and borrowers must be compensated for monies they paid to Prospect erroneously,’ says Karyn Tierney, chair of the MMC, in a statement. ‘This settlement allows the company the ability to continue operating while sending a strong message to the industry that this kind of behavior must be stopped.’

Prospect has been ordered to pay restitution to every borrower in all participating states that was assessed a C2C Settlement Service Fee in the amount of $40 with interest of 10% per annum from the date the fee was charged.

The $7.4 million fine will be paid to the state mortgage regulators.

In addition, Prospect Mortgage must revise its policy and procedure manuals addressing its mortgage operations, fees, disclosures, requirements for charging consumer credit cards, and record retention and submit the changes for review.

‘This settlement is a significant step forward for our company, our employees, our valued customers and industry partners,’ says Joseph Grassi, general counsel for Prospect Mortgage, in a release. ‘Prospect Mortgage is committed to being a leader in its legal and regulatory practices and has invested significantly in these areas.

‘This agreement resolves all legacy allegations contained in the 2013 examination report, and we appreciate the MMC's assistance in putting this matter behind us,’ Grassi adds. ‘We look forward to continuing to focus on our goal of helping our customers achieve their dream of homeownership.’

Headquartered in Sherman Oaks, Calif., Prospect Mortgage claims to be one of the largest independent residential retail mortgage lenders in the U.S. The company offers a full range of loans, including Federal Housing Administration and Veterans Affairs loans, as well as conventional, jumbo and super jumbo, renovation, and other loans.

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