Missourians to receive $32M from Ameriquest Mortgage

The settlement, the second-largest state or federal consumer protection settlement in history, resolves the states' allegations that Ameriquest engaged in unfair and deceptive lending practices, according to a news release from Missouri Attorney General Jay Nixon's office. The largest settlement agreement, for $484 million, was reached in 2002 against Household Finance Corp.

Among the allegations against Ameriquest: Borrowers were encouraged to lie about income or employment to obtain loans; prepayment penalties, discount points and other loan terms were not adequately disclosed; unsolicited refinancing offers did not adequately disclose prepayment penalties; and appraisals were improperly influenced and inflated.

The practices covered a seven-year period, 1999-2005.

“We were concerned that Ameriquest employees deceived consumers as part of high-pressure tactics to sell mortgage refinances,” Nixon said in the release. “We believe these high-pressure sales tactics were used to reach desired sales levels and high monthly individual sales quotas, and were induced by a lopsided commission structure. This agreement should put a halt to these practices.”

Ameriquest will pay a total of $295 million in consumer restitution nationwide and an additional $30 million to the states affected, for the costs of the investigation. Missouri's settlement, which will be filed in Cole County Circuit Court, includes $125,000 for the state for its costs.

“This is a landmark agreement that will change Ameriquest's practices, and it will set standards we expect other mortgage lenders to follow,” Nixon said.

Though Ameriquest denied all allegations raised by the states, the company has agreed to new standards to prevent the alleged unfair and deceptive practices.

In addition, Ameriquest will:

o Provide the same interest rates and discount points for similarly situated customers;

o Not pay sales personnel incentives to include prepayment penalties or any other fees or charges in the mortgages;

o Provide full disclosure regarding interest rates, discount points, prepayment penalties, and other loan or refinancing terms;

o Not encourage prospective borrowers to falsify income sources or levels;

o Provide accurate, good-faith estimates; and

o Adopt policies to protect whistle-blowers and facilitate reporting of improper conduct.

Each state's share of the restitution fund will be in direct proportion to the number of victims residing in that state at the time they took out their loans. Missouri consumers who are eligible for restitution do not need to contact Ameriquest or Nixon's office; they will be contacted in the next several months by the third-party administrator which will oversee the distribution of restitution to consumers.

[[In-content Ad]]