TRENTON
– Attorney General Stuart Rabner announced
today that a special Web site and toll-free
telephone number are now available to provide
information to Ameriquest Mortgage Company
consumers who may be entitled to restitution
as a result of the company’s $325
million settlement with New Jersey and other
states.
The Web site is www.AmeriQuestMultiStateSettlement.com,
and the toll-free number is 1-800-420-5875.
As many as 15,000 New Jersey borrowers may
be eligible for restitution.
New Jersey entered into a multi-state settlement
agreement with Ameriquest, the nation’s
largest sub-prime lender, earlier this year.
The settlement followed an investigation
by state consumer protection agencies, banking
regulators and local prosecutors into alleged
improper business practices. Law enforcement
officials and banking regulators began their
investigation after receiving hundreds of
complaints from Ameriquest customers in
New Jersey and throughout the United States.
The alleged practices included: inadequate
disclosure of prepayment penalties, discount
points and other loan terms; unsolicited
refinancing offers that did not adequately
disclose prepayment penalties; improperly
influenced and inflated appraisals and encouraging
borrowers to lie about income or employment
to obtain loans.
Ameriquest denied all allegations by the
states, but has agreed to pay restitution
to customers in New Jersey and across the
nation, and to eliminate allegedly predatory
lending practices.
“This was an important settlement
agreement for thousands of New Jerseyans,”
Attorney General Rabner said.
“Consumers – often borrowing
large sums of money – were impacted
by questionable business practices that,
as a result of this settlement agreement,
have been eliminated or modified. Under
this agreement, Ameriquest must now provide
full and complete disclosure to customers
so they know all costs involved in obtaining
a mortgage, their financial obligations
over the life of the mortgage, and other
critical information.”
“Ameriquest
consumers in New Jersey need not take any
action at this stage,” Rabner added.
“Each state will determine which customers
in its jurisdiction are eligible to receive
money from the restitution funds, and our
expectation is to begin notifying those
customers in early 2007. In the meantime,
the toll-free number and special Web site
can provide useful information regarding
the settlement agreement.”
Steven M. Goldman, commissioner of the New
Jersey Department of Banking and Insurance,
said, “Lenders have a responsibility
to potential borrowers to be fair and honest
in explaining the terms of a loan in order
to help that consumer to realistically assess
his or her capacity to repay a mortgage.
"In
this instance,” Goldman added, “
thousands of borrowers may have been harmed
by the actions of a company that failed
in this responsibility. Hopefully this settlement
-- including its provisions requiring ready
access to information on claims -- will
help identify those consumers who were harmed
and help to make them whole.”
The total $325 million payment by Ameriquest
ranks as the second-largest state or federal
consumer protection settlement in history,
after the $484 million predatory lending
agreement reached in 2002 between most states
and the Household Finance Corporation.
Under the settlement agreement, Ameriquest
will pay a total of $295 million for consumer
restitution. Of that amount, $175 million
will be distributed in a nationwide claims
process to eligible Ameriquest customers
who obtained mortgages from January 1, 1999
through April 1, 2003. Another $120 million
in restitution will be allocated to the
participating states based on the percentage
of total Ameriquest loans held by consumers
in each state, and will be used to compensate
Ameriquest customers who obtained mortgages
between January 1, 1999 and December 31,
2005.
In addition to agreeing to provide restitution,
Ameriquest has also agreed to pay a total
of $30 million to states participating in
the settlement to help cover the cost of
the Ameriquest investigation, future mortgage-related
consumer awareness programs and enforcement
efforts.
While impacted consumers in New Jersey and
across the nation are expected to receive
restitution eligibility notifications in
early 2007, the Web site and toll-free telephone
number have been made available as part
of an effort by the States -- working in
conjunction with an appointed national settlement
administrator – to assist Ameriquest
customers seeking to learn about the settlement,
and to have their questions answered.
The
Web site provides access to a complete copy
of the Ameriquest settlement agreement,
information on who may be eligible to receive
restitution payments, and answers to a variety
of frequently asked questions. It also provides
visitors a mechanism for directly e-mailing
the nationwide settlement administrator.
Between 1999 and 2005, Ameriquest issued
loans in New Jersey in excess of $4 billion.
It is estimated that between 14,000 and
15,000 New Jersey borrowers may be eligible
for restitution. The actual dollar amounts
available to individual consumers has not
been determined, and will hinge on the facts
of individual borrower's cases.
Based in Orange, California, Ameriquest
Mortgage is a subsidiary of the ACC Capital
Holding Corporation. ACC was also party
to the settlement agreement along with its
other subsidiaries including Town and Country
Credit Corporation and AMC Mortgage Services,
Inc., formerly known as Bedford Home Loans.
Ameriquest primarily makes refinancing loans
to existing homeowners who are hoping to
consolidate credit card and other debt into
their new home mortgages and realize overall
monthly savings. Borrowers who do not have
the best credit ratings may turn to sub-prime
loans, which often have higher interest
rates and other costs attached.
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