One of the biggest independent mortgage lenders in the country has been hit with a $3 million fine for misleading customers about interest rates, according to an American Banker report.
New York State levied the fine against Prospect Mortgage after an investigation by the state’s Department of Financial Services uncovered violations of state law, according to the report. State regulators claim that Prospect charged borrowers up-front fees to reduce their interest rates, but didn’t make good on the discounts. Other alleged violations include failing to maintain proper records and doing business with unlicensed originators, according to American Banker.
“This action should serve as a reminder to all mortgage lenders that we will continue to root out deceptive mortgage practices,” Gov. Andrew Cuomo said in a press release.
Prospect agreed to pay the $3 million to settle the claims and issue progress reports to the state as it remedies the violations. The company, based in Sherman Oaks, Calif., makes loans nationwide. It recorded $7bn in loan volume in 2012, according to American Banker.