State Files Ameriquest Settlement
California officials Tuesday filed a formal settlement with Ameriquest Mortgage Co. that would provide borrowers in the state as much as $50 million in restitution, but cautioned that consumers wouldn’t see the money for at least another year.
The agreement, filed in Alameda County Superior Court, governs California’s portion of a $325-million settlement of predatory lending allegations with 49 states and the District of Columbia. In the January settlement, Orange-based Ameriquest agreed to pay $295 million in restitution and an additional $30 million to compensate authorities for investigative costs.
The funds won’t be distributed until the entire amount is collected in quarterly installments over the course of a year, said Thomas Papageorge, head of consumer protection for the Los Angeles County district attorney’s office, one of the first agencies to begin investigating the lender.
In California, about 108,000 borrowers who received loans from Ameriquest beginning in 1999 will be eligible to share in the restitution. They will be contacted by authorities as formulas for distributing the money are put in place, and don’t need to do anything at this time. People with questions can contact the California attorney general’s office at (800) 952-5225.
The amount to be distributed to Californians is estimated to be as much as $50 million, Papageorge said, “but it will be at least spring 2007 before those payments go out to people.”
A multi-state task force had investigated allegations that Ameriquest misled borrowers about rates, fees and penalties; encouraged appraisers and borrowers to falsify property values and earnings; and forged evidence of income and assets, qualifying people for loans they couldn’t afford.
The company, a specialist in higher-rate lending to borrowers with bad credit or other problems, didn’t admit systematic wrongdoing, and said it had fired employees who had engaged in improper loan practices.
As part of its settlement, Ameriquest also agreed to be bound by new standards, saying it hoped the rules would set a new benchmark for the lending industry. These restrictions include fuller and earlier disclosure of loan terms, a ban on paying incentives to loan agents for including prepayment penalties or other charges, and a requirement to offer similarly situated customers the same interest rates and discount points. An independent monitor will help ensure that the company complies.
