Federal and state law-enforcement officials today announced a $325 million settlement today with Ameriquest Mortgage Co., the nation’s biggest home lender to people with bad credit.
The settlement ends a two-year investigation by all 50 state attorneys general, banking regulators and local prosecutors into allegations that Ameriquest deceived consumers to sell mortgages, using high-presure sales tactics to meet employee sales quotas. In addition to paying $295 million in consumer redress and $30 million in legal fees, the company has agreed to change some of its business practices and accept outside monitors who will observe the company’s operations to make sure it is living up to the agreement.
Consumers do not need to take any action at this point to pursue recoveries – they will be contacted later by their state officials in the months ahead as specific recovery terms and plans are determined.
Ameriquest did not admit any wrongdoing in agreeing to the settlement; but issued a statement saying “we regret those occasions when our associates have not met this ideal to our customers’ expectations… This agreement is good for consumers and fair to the company. It provides a framework for new lending policies that improve and enhance our ability to serve our customers and are a model for the industry.”
Thousands of homeowners around the country have sued Ameriquest, saying they incurred significant financial harm after taking out an Ameriquest mortgage. Some lost their homes and were forced into bankruptcy. Several class-action suits against Ameriquest remain pending.
The settlement is important to the Bush administration because it nominated Ameriquest’s founder and principal shareholder, Roland E. Arnall, to be the ambassador to the Netherlands. Arnall has been Bush’s single largest campaign contributor since 2002.