Prospect Mortgage, Sherman Oaks, Calif., Wednesday afternoon agreed to pay the Department of Housing and Urban Development (HUD) $3.1 million to settle charges that it created sham affiliated business arrangements as part of a scheme to share in “kickbacks” paid to these joint ventures.

Although Prospect agreed to settle the allegations, pay the fine, and unwind the JVs in question, it also officially denied the charges. The settlement with acting Federal Housing Administration (FHA) commissioner was signed by Prospect Mortgage CEO Ronald Bergum.

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