Ameriquest to Settle Fee Probe in Connecticut

Ameriquest Mortgage Co. agreed Thursday to pay more than $7 million to settle allegations by Connecticut authorities that it overcharged its customers and that it used unlicensed loan salespeople.

Connecticut authorities say the Orange-based company violated state laws aimed at deterring loan-flipping, or pushing customers to refinance mortgages within two years to generate fees.

An Ameriquest spokesman said the excessive charges resulted from “unintentional process errors.”

Under the deal, Ameriquest will pay the state $1 million in fines and $6 million to support Connecticut’s housing assistance programs for urban residents over the next five years.

Ameriquest Mortgage is a unit of privately held Ameriquest Capital Corp. The company made $82 billion in loans last year through Ameriquest Mortgage and other subsidiaries.

In advance of the settlement, Ameriquest reimbursed at least 360 customers in Connecticut who were overcharged in recent years. The customers were reimbursed for excessive prepaid finance charges, known as points, which under the state’s predatory lending law usually are limited to a total of 5% of the loan amount within two years. These customers also were paid $500 apiece in added compensation.

Ameriquest declined to say how much it paid in reimbursement. Daniel Blinn, an attorney who is pursuing separate civil suits against the company, said several of his clients received payments of $5,000 to $6,000.

In early 2004, Ameriquest paid about $670,000 in reimbursements and fines to resolve similar claims in Connecticut.

“They are a repeat offender,” state Banking Commissioner John P. Burke said Thursday.

The deal is unrelated to a separate scrutiny of Ameriquest’s lending practices by a task force representing regulators and attorneys general from 30 states.

An Ameriquest spokesman said the company cooperated fully with Connecticut investigators and voluntarily made customer refunds.

“We are pleased to have reached a fair resolution and will continue to serve our customers in Connecticut and to help residents of the state achieve their homeownership dreams and meet their financial goals,” Ameriquest Vice Chairman Adam Bass said in a statement.

The firm’s “best practices” guidelines bar its brokers from soliciting refinance deals within two years of an original loan. Burke said it was unclear whether brokers had initiated any of the transactions, but said there was “no evidence of a concerted effort” to do so.

He said his office had been working with Ameriquest’s computer supervisors to ensure that future violations would not occur.

Burke said the state would appoint an independent auditor to review the company’s compliance over the next two years. The deal also spells out stiff penalties for future violations.

“It’s trust but verify,” he said.