OLYMPIA – Attorney General Rob McKenna and Scott Jarvis, Director of the Department of Financial Institutions (DFI), announced – July 12 – that more than 12,000 Washington residents are eligible for an estimated $9.1 million in restitution from Ameriquest Mortgage Company and its related companies. The money comes from last year’s $325 million national settlement, in which states alleged widespread fraud by Ameriquest as part of a high-pressure scheme to sell mortgages that trapped consumers into debt and put them at risk of losing their homes.
Letters and claim forms were sent to eligible Washington consumers this week. To receive restitution, consumers must mail their completed, signed form to the settlement administrator by Sept. 10, 2007.
“Most of the Washington families who were harmed by Ameriquest’s unfair and deceptive lending practices will receive restitution,” McKenna said. “And many will receive larger payments than borrowers in other states.”
“Washington received more money for legal costs than most states because of our leadership role in the investigation and settlement negotiations,” McKenna explained. “The Attorney General’s Office and DFI agreed to add $1.85 million of the $2.5 million we received for investigative and attorneys’ costs into the restitution pool. With interest, that brought the total amount available to consumers to $9.1 million.”
Under the settlement, more than 481,000 borrowers nationwide who were customers of Ameriquest Mortgage Company, Town and Country Credit Corporation, and AMC Mortgage Services, Inc. (formerly known as Bedford Home Loans) between Jan. 1, 1999, and Dec. 31, 2005, are eligible to receive restitution.
Washington consumers who participate in the settlement will receive payments as little as $100 to as much as $4,400, depending on when they applied for a loan and individual circumstances.
Ameriquest made a substantial change in its loan pricing system that was implemented in the spring of 2003. For that reason, consumers were divided into two groups for the purposes of determining restitution amounts:
- Borrowers who took out loans between Jan. 1, 1999, and April 1, 2003, will receive an average of $990.
- A total of 4,945 of the 5,005 Washington residents who received loans during this period are eligible for refunds.
- Borrowers who took out loans after this time between April 2, 2003, and Dec. 31, 2005, will receive an average of $562.
- A total of 7,424 of the 10,839 Washington residents who received loans during this period are eligible for refunds.
- States devised a formula to determine who should receive restitution among the borrowers who received loans after Ameriquest changed its pricing system.
- Consumers who had suffered the greatest injury were given priority, including borrowers who:
- Lost homes due to foreclosure;
- Defaulted on their loans within 90 days;
- Were switched from a fixed-rate loan to an adjustable-rate mortgage during refinancing; or
- Whose income levels or home values were falsely inflated in order to help them qualify.
- Consumers who had suffered the greatest injury were given priority, including borrowers who:
Packets mailed to consumers indicate the minimum payment individuals can expect to receive. Exact amounts may be larger than indicated, depending on the number of eligible Washington consumers who participate in the settlement.
Consumers who opt to receive the restitution payments relinquish their right to file lawsuits or participate in class actions against Ameriquest related to the loans covered by the settlement. Therefore, eligible individuals are encouraged to consult with a private attorney or, if they qualify, a legal services attorney before deciding whether to participate in the settlement. Consumers who participate in the settlement do not give up any claim they may otherwise raise if their home goes into foreclosure, however.
“The Ameriquest settlement ranks as the second-largest state or federal consumer protection settlement in history,” McKenna said. “The case served as a warning to the subprime mortgage industry that states won’t tolerate unfair or deceptive lending practices.”
“DFI is diligent in our efforts to ensure that Washington consumers are protected from unethical practices as they pursue the American dream of owning a home,” Jarvis added. “This department is working to educate consumers to ensure they understand their rights and are making informed decisions about home loans.”
Consumer Information Detailed information about the settlement and eligibility for restitution is available at www.ameriquestmultistatesettlement.com. Consumers also may contact the settlement administrator at 1-800-420-5875. (Hearing-impaired persons may call 866-494-8274.)Guide to Home Loans
The Washington State Department of Financial Institutions offers consumers a Guide to Home Loans online, in booklet format and on CD-ROM. To order a booklet or CD, call (360) 902-8700 or (877) 746-4334.
Ameriquest Case History Ameriquest case history: Information about the Ameriquest settlement and court documents are available at http://www.dfi.wa.gov/cs/ameriquest.htm.
Requirements of Ameriquest Under This Agreement
- Provide full disclosure regarding interest rates, discount points, prepayment penalties, and other loan or refinancing terms. The agreement provides for both written and oral disclosures.
- Ensure that employees do not defeat the purpose of these disclosures by criticizing or playing down the accuracy or importance of the disclosures.
- Provide the same interest rates and discount points for similarly-situated consumers.
- Ensure that every loan benefits not only Ameriquest and its commissioned employees but the borrower as well.
- Substantially revise their compensation system to eliminate incentives for employees to deceive borrowers. This new system may not provide incentives to include prepayment penalties or any other fees or charges in the mortgages.
- Retrain their employees to comply with the terms of the settlement agreement.
- Monitor their employees more closely to ensure they comply with the settlement agreement and do not otherwise break the law.
- Overhaul the company’s appraisal practices by removing branch offices and sales personnel from the appraiser selection process, prohibiting them from pressuring appraisers for higher values and instituting a system of periodic review to ensure the independence of appraisers and the accuracy and integrity of the appraisals. Not encourage prospective borrowers to falsify income sources or income levels.
- Limit prepayment penalty periods on certain variable rate mortgages.
- Not solicit their borrowers to refinance during the first 24 months of their loan, unless the borrower initiates it.
- Use independent loan closers.
- Adopt policies to protect whistle-blowers and facilitate reporting of improper conduct
Media Contacts
Kristin Alexander, Media Relations Manager, Attorney General’s Office, (206) 464-6432
David Huey, Assistant Attorney General, (253) 593-5057
Lyn Iverson, Communications Consultant, DFI, (360) 902-8731
Deborah Bortner, Director of Consumer Services, DFI, (360) 902-0511
