Posted on 01/23/2006 7:50:02 PM PST by NormsRevenge
NEW YORK (Reuters) - Ameriquest Mortgage Co. said on Monday it agreed to pay $325 million in the second largest U.S. consumer lending settlement to clear up claims that its lending practices abused customers in 49 U.S. states.
A two-year investigation found that salespeople at the company concealed interest rate and loan costs, pressured appraisers to inflate values of borrowers' homes, and used other high-pressure tactics to close deals, New York Attorney General Eliot Spitzer's office said in a statement on Monday.
The agreement requires Ameriquest, one of the largest U.S. mortgage lenders to people with poor credit, to pay $295 million in restitution to consumers, $30 million for legal costs, and to change its sales practices.
"Abusive and predatory lending practices will not be tolerated," Spitzer said in a statement. Spitzer was one of a group of attorneys general and state banking regulators who carried out the investigation and negotiated the settlement.
Orange, California-based Ameriquest, owned by privately held ACC Capital Holding Corp., did not acknowledge wrongdoing but said it regretted occasions when its sales associates had not properly served customers.
Subprime lending, or lending to borrowers with damaged credit, has faced increased regulatory scrutiny in the last five years as the government has tried to prevent lenders from preying on vulnerable borrowers like the elderly or non-native English speakers.
The subprime lending industry has mushroomed since the early 1990s, allowing many borrowers to get loans that would not have been possible 20 years ago, but also creating more opportunities for abusive lending practices.
As part of the settlement, Ameriquest agreed to overhaul its sales, appraisal and closing practices, and to allow an independent monitor to ensure the company complies with the agreement.
Ameriquest first disclosed the likely size of the settlement in July in a regulatory filing for investors in secured Ameriquest bonds known as asset backed securities.
California will receive the largest share of the proceeds because it had the highest volume of Ameriquest loans from 1999 through 2005.
In 2002, U.S. states and Household Finance Co. reached the largest U.S. predatory lending settlement ever, at $484 million.
Ameriquest does not do business in the state of Virginia.
The subprime lending industry has mushroomed since the early 1990s, allowing many borrowers to get loans that would not have been possible 20 years ago, but also creating more opportunities for abusive lending practices.
Hello market bubble.
Ameribust!
:)
Since Schwarzenegger took office in 2003, he alone has pulled in more than $1.5 million from Ameriquest, Roland Arnall and his wife, Dawn. Ameriquest also has given $1.5 million to groups backing the governor's political efforts and, along with the Arnalls, has contributed $1.5 million to the California Republican Party.
If you're from Rio Linda that's 4.5 million dollars folks ... to the Wilsonegger gang ... in 2 years.
Hopefully not hello market bubble POP!! At least until my house is sold, LOL.
Isn't it a given that when there is an increase in a market that there is a subsequent increase in the negative aspects of that market also?
For instance Vehicle sales constantly increase. And so do instances of vehicle liability claims against the manufacturer.
Local Boy Makes Good
Speaking of morally corrupt, and just to prove (again) that there's not much you can't buy in politics, the LAT reports this morning that Roland Arnall, founder of Orange-HQed Ameriquest (one of the largest employers in the County, along with its sister operation, Argent Mortgage) will finally get his ambassadorship from the Bush administration -- once Ameriquest ponies up $325 million "to settle allegations by 33 states that it overcharged its home loan customers and pressured appraisers to inflate property values".
The Times reported that:
...the deal is expected to help clear the way for company founder Roland E. Arnall to be confirmed as ambassador to the Netherlands. A Senate vote on the nomination was sidelined after Democrats on the Foreign Relations Committee said Arnall's company should first settle the probe.
Congratulations, Roland, and don't let the door hit you in the butt on the way out.
Posted by Lurk on January 23, 2006
"and pressured appraisers to inflate property values".
More like bribed.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.