Ameriquest Mortgage agrees to $325mn settlement

01/24/06 - newratings.com

NEW YORK, January 24 (newratings.com) – Ameriquest Mortgage Co, the largest US lender to home-loan borrowers with credit problems, has agreed to pay $325 million to settle allegations of fraud and misleading consumers, putting an end to a two-year multi-state investigation.

An investigation into the Orange, California-based company by 49 states led by Washington and six other states revealed that from 1999 to 2003 Ameriquest Mortgage had inflated home appraisals and fudged information to allow more people to qualify for loans. The company offered financial incentives to sign consumers at higher and higher rates.

According to the settlement announced on Monday by Washington Attorney General Rob McKenna, Ameriquest Mortgage would have to pay $295 million to borrowers and $30 million for investigations by state officials. The settlement would benefit more than 240,000 US borrowers. The amount represents the second-highest state or federal consumer protection settlement in US history, after the $484 million predatory lending agreement with Household Finance Corp a couple of years back.

As part of the settlement, Ameriquest Mortgage has also agreed to significant changes in its business processes. The company said in a statement that it would strengthen "standards, policies and practices, taking a number of steps to better inform consumers and eliminate potential conflicts of interest in the loan origination and funding process." Ameriquest Mortgage denied any wrongdoing.