Ameriquest Mortgage to Pay $325 Million Settlement in Predatory Lending Case

January 24, 2006 – Yesterday, Ameriquest Mortgage agree to pay $325 million in restitution to those who had borrowed money from the company. The agreement settles legal disputes with 49 states and the District of Columbia, and is the second largest in US history.

Ameriquest had been accused of using predatory lending practices when making consumer home loans. The company, which is known for making loans to consumers with low credit scores, had provided incentives to its agents to steer consumers into high priced loans that they could not afford to pay back. In some cases, consumers who qualified for lower interest rates were actually placed in high interest rate loans.

The accusations also included encouraging consumers to lie about their income levels so that they could get more money. According to ABC News, some Ameriquest agents were accused of filling out all loan paperwork and falsifying tax documentation in order to help consumers qualify.

As a result of Ameriquest’s actions, consumers have been forced into bankruptcy, lost their homes, and been saddled with debts that they will never be able to repay.

The settlement will provide affected consumers with an average of $600 in repayment. But some consumers who were badly hurt by the company’s actions with not participate in the settlement pool because they are moving forward with their own law suits.

Under the terms of the agreement, Ameriquest had to agree to abide by certain ethical standards of doing business, as well as to monitoring. If the company does not abide by the agreement, the states can file suit against Ameriquest again.

Ameriquest’s loan officers will also be required to make certain disclosures to consumers when they borrow through the company. These include telling consumers the loan interest rate. If the rate is adjustable, they also need to disclose the cap on the interest rate. Additionally, they will have to inform consumers about any prepayment penalties. And Ameriquest will be forbidden from giving loan officers any form of incentive based on the interest rate of the loans they sell.

The settlement agreement comes just as Ameriquest’s founder and largest shareholder, Roland C. Arnall, is due to be confirmed by the full Senate. Arnall was a major campaign contributor to President Bush, and has been nominated by the President to become US Ambassador to the Netherlands.

Arnall had been urged by several members of the Senate Foreign Relations Committee to settle the suit prior to his confirmation vote. He played a principle role in the negotiation process and issued an apology for his "misdeeds". It should be noted that under the terms of the agreement, Ameriquest itself denied any wrongdoing.

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