$325 Million Ameriquest Settlement Announced

25 01 2006

Ameriquest, the nation’s largest lender specializing in sub-prime loans, has agreed to refund $295 million to consumers and make sweeping reforms of practices that the states alleged amounted to predatory lending. Ameriquest will also pay a total of $30 million to the states for costs of the investigation and consumer education and enforcement.

The settlement resolves allegations of predatory practices by the company, including claims of inflated appraisals, unjustified fees and penalties, and high-pressure and deceptive tactics against prospective borrowers. The Office of Financial Regulation and the Attorney General’s Office negotiated Florida’s share of the settlement for Ameriquest’s approximately 62,000 borrowers in Florida. Consumers do not need to take any action at this point to pursue recoveries; they will be contacted later after specific recovery terms and plans are determined.

Under the agreement, Ameriquest must exceed current requirements in the law to protect prospective borrowers. The new requirements include provisions for full disclosure of loan terms, including specific language to be included in loan documents. Potential borrowers must be told what kind of loan they will be getting and whether the loan includes a prepayment penalty. Appraisals cannot be inflated, and there will be restrictions on refinancing offers and prepayment penalties. No refinancings may be made that do not benefit the borrower. Independent third parties will now handle closings, at which borrowers are asked to review and sign final loan documents. The courts must approve the settlement before it becomes final.

The settlement is between the states and ACC Capital Holding Corporation, along with its subsidiaries Ameriquest Mortgage Company, Town & Country Credit Corporation and AMC Mortgage Services, Inc., formerly known as Bedford Home Loans.

Source: FLORIDA ASSOCIATION OF REALTORS


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