Settlement will result in compensation to affected borrowers, an administrative penalty, and revision of the offending lender’s policies.
HONOLULU – December 03, 2015 – (RealEstateRama) — The state Department of Commerce and Consumer Affairs’ (DCCA) Division of Financial Institutions (DFI) participated in an agreement in late November with all 50 state mortgage regulators and Prospect Mortgage, LLC to send a message on the practice of charging unsupported and improperly disclosed fees to borrowers.
The unsupported fees were identified during an examination by the Multi-State Mortgage Committee (MMC), part of the Conference of State Bank Supervisors. Prospect collected a fee from borrowers for Prospect’s subsidiary C2C Appraisal Services and failed to properly disclose that C2C was an affiliated business and failed to account for the full C2C Settlement Service Fee. In addition, some of the settlement services charged by C2C were performed by Prospect employees.
As part of the agreement, Prospect will:
Pay restitution to affected borrowers;
Revise its policies and procedures regarding mortgage operations, fees, disclosures, requirements for charging consumer credit cards, and record retention to meet MMC standards; and,
Pay administrative penalties to mortgage regulators in the affected states.
Hawaii’s share of the administrative penalty is $47,000.
“This settlement agreement sends a strong message against charging unfair fees to borrowers,” said Iris Ikeda, the Commissioner of Financial Institutions. “In many cases improperly disclosed and unexpected fees can cause financial distress to borrowers and would-be homeowners. We are pleased with the results of the settlement agreement and Prospect’s willingness to revise their policies.”
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DFI ensures the safety and soundness of state-chartered and state-licensed financial institutions, and ensures regulatory compliance by state-licensed financial institutions, escrow depositories, money transmitters, mortgage servicers, mortgage loan originators, and mortgage loan originator companies, by fairly administering applicable statutes and rules in order to protect the rights and funds of depositors, borrowers, consumers and other members of the public.
Multimedia Education Specialist
Department of Commerce and Consumer Affairs
Office: (808) 587-6735
Cell: (808) 286-9626