Multistate Investigation into Ameriquest's Predatory Lending Practices

In 2004, 25 state regulators and attorneys general launched an investigation into Ameriquest Mortgage Company's lending practices after receiving complaints from hundreds of consumers across the nation. Consumer complaints included the company's unfair disclosure of prepayment penalties, its influenced and inflated appraisals, and its encouragement of consumers lying about income or employment to obtain loans. Ameriquest Mortgage Company is the nation's largest subprime lender and primarily makes refinancing loans to homeowners hoping to save money on monthly payments by consolidating credit card and other debt into a new home mortgage. These subprime loans often carry higher interest rates or costs over the life of the loan.

The goal of this investigation was to stop Ameriquest's predatory lending practices.

The multistate investigation led to a settlement agreement under which Ameriquest will pay $295 million to consumers and $30 million to 49 states and the District of Columbia to cover their costs and fund consumer education and consumer protection enforcement programs. In addition, Ameriquest will make extensive changes to its lending practices. It will:

-provide the same interest rates and discount points for similarly situated consumers;
-stop paying sales personnel incentives to include extra fees or penalties in mortgages;
-fully disclose interest rates, discount points, prepayment penalties, and other loan terms to consumers;
-overhaul its appraisal practices;
-stop encouraging prospective borrowers to falsify income sources or levels; and
-stop soliciting consumers to refinance their mortgage during the first 24 months of a loan, unless the borrower is already considering refinancing.

This is the second largest settlement agreement reached to date related to predatory lending
practices, after the Household Finance Corporation settlement.