Attorney General's News Release

March 21, 2006

Nixon files settlement with mortgage lender Ameriquest; Missourians to receive $3.2 million in restitution

Jefferson City, Mo. — Attorney General Jay Nixon announced today that Missouri's settlement with Ameriquest Mortgage Co. was filed today in Cole County Circuit Court as part of a $325 million nationwide settlement between Ameriquest and 49 states. More than 10,000 Missouri consumers who borrowed money through the nation's largest sub-prime lender may be eligible for restitution payments totalling approximately $3.2 million from the company.

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.

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 also 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.

Ameriquest employees allegedly deceived consumers as part of high-pressure tactics to sell mortgage refinances, using such tactics to reach desired sales levels and high monthly individual sales quotas, induced by a lopsided commission structure.

In the agreement, Ameriquest denies all the allegations raised by the states, but the company agreed to significant changes and reforms of its policies and procedures 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 or 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; and
• Adopt policies to protect whistle-blowers and facilitate reporting or 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 the Press Secretary.

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