Management unaware of 'legacy' issues at center of $3m fine

by Adam Smith28 Oct 2013

A major lender has claimed its settlement with New York State stemmed from "legacy issues" that current management was unaware of.

Prospect Mortgage last week reached an agreement with New York's Department of Financial Services that sees the lender paying a $3m fine for misleading customers about interest rates. The settlement, Prospect said, does not amount to an admission of wrongdoing, and CEO Ron Bergum said the lender cooperated with state officials to reach the agreement.

"We have worked cooperatively and proactively with the State to reach this agreement, which resolves legacy issues related to prior acquisitions," Bergum said. "Prospect is committed to excellence and integrity in every aspect of our business and we are constantly working to strengthen the quality of our processes and to raise the level of service we provide our customers."

Bergum said the company remained "focused on improving customer service" in "an ever-changing regulatory environment".

"While the current management and ownership was unaware of several of the pre-acquisition legacy issues that were raised by the DFS during these discussions, we have worked diligently with the State to address the State's concerns. This agreement is a positive step forward for our operations in the state of New York and our relationship with the DFS."

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