Prospect Mortgage reached an agreement with the Multi-State Mortgage Committee on behalf of 50 state mortgage regulators after an examination revealed a pattern of charging improperly disclosed and unsupported fees paid to the company’s affiliate, C2C Appraisal Services.
Prospect said the agreement resolves findings contained in a Report of Examination issued to Prospect on May 2, 2013, covering the period of Oct. 1, 2010 to March 31, 2012. The settlement relates to alleged activities that ceased years ago and occurred prior to the present management.
“Prospect’s past practice of charging unsupported fees is unacceptable and borrowers must be compensated for monies they paid to Prospect erroneously,” said Karyn Tierney, Chair of the MMC. “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.”
According to the MMC, Prospect will do the following:
- Prospect shall 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 percent per annum from the date the fee was charged, for an estimated $2.8 million in combined restitution.
- Prospect shall pay an administrative penalty of approximately $7.4 million to the state mortgage regulators.
- Prospect must revise and submit to the MMC for review its Policy and Procedure Manuals addressing specifically the areas of mortgage operations, fees, disclosures, requirements for charging consumer credit cards, and record retention.
"This settlement is a significant step forward for our company, our employees, our valued customers and industry partners. Prospect is committed to being a leader in its legal and regulatory practices and has invested significantly in these areas,” said Prospect General Counsel Joseph Grassi.
“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. We look forward to continuing to focus on our goal of helping our customers achieve their dream of homeownership," said Grassi.
Check here for a copy of the Settlement Agreement and Consent Order.