Business

Hawai’i Among States Combating Unsupported Mortgage Fees

December 1, 2015, 4:08 PM HST
* Updated December 1, 4:11 PM
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The State of Hawai’i, along with 50 state mortgage regulators and Prospect Mortgage, LLC, made an agreement in late November that would promote awareness on the practice of charging unsupported and improperly disclosed fees to borrowers.

According to the State of Hawai’i Department of Commerce and Consumer Affairs’ Division of Financial Institutions, unsupported fees were identified during an examination by the Multi-State Mortgage Committee. The committee is part of the Conference of State Bank Supervisors.

Prospect collected a fee from borrowers for its subsidiary, C2C Appraisal Services, and did not properly disclose that C2C was an affiliated business. In addition, the full C2C Settlement Service Fee was not accounted for. Some of the settlement services charged by C2C were performed by Prospective employees.

Under 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.

“This settlement agreement sends a strong message against charging unfair fees to borrowers,” said Iris Ikeda, 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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Hawaii’s share of the administrative penalty is $47,000.

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