Attorney General's News Release

January 23, 2006

Mortgage lender Ameriquest to pay Missouri consumers $3.2 million as part of nationwide settlement, Nixon says

Jefferson City, Mo. — More than 10,000 Missouri consumers who borrowed money through Ameriquest Mortgage Co., the nation’s largest sub-prime lender, will be eligible for restitution payments totaling approximately $3.2 million from the company.

The restitution is part of a $325 million nationwide agreement between Ameriquest and 49 states announced today by Attorney General Jay Nixon. Nixon says this is 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 Household Finance Corp.

Nixon says the settlement resolves the states’ allegations that Ameriquest engaged in unfair and deceptive practices, including encouraging borrowers to lie about income or employment to obtain loans; inadequately disclosing prepayment penalties, discount points and other loan terms; using unsolicited refinancing offers that did not adequately disclose prepayment penalties; and improperly influencing and inflating appraisals. The practices covered a seven-year period from 1999 through 2005.

"We were concerned that Ameriquest employees deceived consumers as part of high-pressure tactics to sell mortgage refinances," Nixon says. "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 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 says.

In the agreement, Ameriquest denies all the allegations raised by the states, but the company agreed to new standards to prevent what the states alleged were unfair and deceptive practices.

In addition to restitution, Ameriquest will:

• Provide the same interest rates and discount points for similarly situated customers.
• Not pay sales personnel incentives to include prepayment penalties or any other fees of charges in the mortgages.
• Provide full disclosure regarding interest rates, discount points, prepayment penalties, and other loan or refinancing terms.
• Not encourage prospective borrowers to falsify income sources or levels.
• Provide accurate, good-faith estimates.
• 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 the Attorney General’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.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818