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Md. notifies borrowers in Ameriquest
settlement
12,340 customers in state are eligible for restitution
of several hundred dollars
By Laura Smitherman
Sun reporter
Marylanders who got home loans from Ameriquest Mortgage
Co. can begin to claim their share of a $325 million
settlement reached with the subprime lender that was
accused of preying upon borrowers nationwide with deceptive
practices.
Douglas F. Gansler, Maryland's attorney general,
announced yesterday that his agency and the Maryland
commissioner of financial regulation sent letters
and claim forms this week to 12,340 Ameriquest
customers in Maryland who are eligible for $7.8
million in restitution.
Depending on how they were harmed, borrowers could receive
hundreds, and in some cases thousands, of dollars.
Ameriquest, a subsidiary of ACC Capital Holdings in
Orange, Calif., agreed in January 2006 to settle the
case brought by 49 states, including Maryland, after
a two-year investigation. Under the agreement, the company
has been paying into a settlement fund in installments.
"It's a very, very large amount of money, so we
allowed them to pay quarterly, rather than come up with
the entire amount all at once," said V. Scott Bailey,
a Maryland assistant attorney general. "That would
have put them out of business, and in that case it would
have been questionable how much we could have collected
for consumers."
Regulators said the lender, which consented to changing
its lending practices but didn't admit any wrongdoing,
misrepresented the terms of home loans, such as whether
it carried a fixed or an adjustable rate.
The lender and its affiliates also charged excessive
loan origination fees and prepayment penalties; refinanced
borrowers into inappropriate loans, and inflated appraisals
used to qualify borrowers for loans, regulators said.
Ameriquest has been retrenching along with the subprime
industry, which has been roiled by losses from rising
foreclosures. Subprime loans are made to borrowers with
bad credit histories or heavy debt.
The mortgages often charge higher interest rates to
compensate for the greater risk of default.
Dozens of subprime mortgage companies have declared
bankruptcy, shuttered operations or been sold in recent
months. Ameriquest, which was one of the largest, closed
more than 200 branch offices last year and consolidated
operations into four call centers.This year the company
moved those operations into one call center in Orange,
spokesman Chris Orlando said.
The National Association for the Advancement of Colored
People sued Ameriquest and other lenders this week. The
civil rights group alleges that the lenders discriminated
against black borrowers by steering them into higher-interest
subprime loans while giving more favorable loan terms
to whites.
As for the multistate settlement, Orlando called the
restitution "an important final step." The
settlement covers customers of Ameriquest, Town and Country
Credit Corp., and AMC Mortgage Services, formerly known
as Bedford Home Loans, from January 1999 through December
2005.
Consumers owed restitution will be paid out under two
tiers depending on how they were allegedly deceived.
One will pay out an average of $756; the other an average
of $569.
The forms mailed to eligible borrowers indicate a minimum
payment they can expect to receive, though that figure
could grow if fewer borrowers decide to take part in
the settlement.
Consumers who do opt for the settlement give up their
right to sue Ameriquest over the loans that are covered;
they would not be giving up any claim they could otherwise
raise if their homes go into foreclosure.
Gansler's office encouraged consumers to consult a private
attorney or seek subsidized legal services. They must
mail competed and signed forms to the settlement administrator
by Sept. 10.
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