Just months following a settlement over illegal fees paid to an appraisal affiliate, Prospect Mortgage LLC has agreed to a settlement tied to government-insured loans.
Back in January, the Sherman Oaks, California-based mortgage banker agreed to a consent order with the Consumer Financial Protection Bureau.
At issue were fees paid to an appraisal affiliate of Prospect, which the CFPB claimed violated the
Real Estate Settlement Procedures Act.
The
home lender has since reached another settlement over its practices.
On Monday, the U.S. Attorney for the Northern District of California announced a $4.157 million settlement with Prospect.
According to the statement, the settlement resolves allegations that Prospect violated the False Claims Act with its handling of mortgages insured by the Federal Housing Administration.
The Department of Justice claims that the company falsely certified
compliance with critical underwriting and quality control requirements on FHA loans.
Many of the loans covered by the settlement were originated by two branches — one in Florida and one in North Carolina. The mortgagee’s delinquency rate on loans within the Department of Housing and Urban Development’s Atlanta Home Ownership Center was 12.29 percent between December 2007 and December 2009 — well above the national average.
The findings were uncovered by a HUD
Office of Inspector General audit.
“The government’s investigation revealed that the majority of the audited loans from these branches were not compliant with HUD underwriting requirements relating to Prospect’s assessment of borrower: (1) assets; (2) income; and (3) credit, which are essential considerations in determining whether a loan will be repaid, as opposed to going into default or serious delinquency,” the Justice Department’s statement said.
