Ameriquest to pay $325 million
Attorney General Eliot Spitzer and the Attorneys General and banking regulators of 48 states announced a $325 million agreement with the nation’s largest subprime mortgage lender to overhaul its existing sales, appraisal and closing practices.
The two-year investigation revealed that Ameriquest created a hyper-aggressive, high pressure sales culture that encouraged its sales personnel to engage in deceptive and fraudulent conduct, including:
• Charging consumers thousands of dollars in discount points that resulted in higher commissions for sales personnel but failed to yield a lower interest rate for borrowers;
• Concealing the interest rate and loan costs during the application process;
• Sending inaccurate “good faith estimates”;
• Making misleading comparisons between borrowers’ existing loans and Ameriquest’s loan proposals;
• Falsifying loan documents to push through loans, including inflating borrowers’ incomes;
• Pressuring appraisers to inflate the values of borrowers’ homes;
• Closing loans before they were approved by the corporate office; and
• Failing to fund loans in a timely fashion.
The settlement agreement requires Ameriquest to:
• Provide the same interest rates and discount points for similarly situated consumers;
• Provide full written and oral disclosures regarding interest rates, discount points and prepayment penalties, and provide important information regarding consumers’ pricing options;
• Overhaul its appraisal practices by prohibiting sales personnel from selecting, contacting, or attempting to influence appraisers;
• Provide accurate good faith estimates;
• Refrain from soliciting borrowers for refinancing within two years of the original loan, except under limited circumstances;
• Use independent loan closers; and
• Adopt policies to protect whistle-blowers and facilitate reporting of improper conduct.