Ameriquest to pay $1.5 million to isle clients

The lender settles a lawsuit alleging predatory practices

Hawaii consumers who took out loans from Ameriquest Mortgage during the last six years will split $1.5 million in restitution paid by the nation's largest subprime lender as part of a landmark $325 million settlement agreement.

The Hawaii Department of Commerce and Consumer Affairs and the Office of Consumer Protection announced the settlement yesterday, which is being called the second-largest consumer protection settlement ever reached by a state or federal government.

CLAIM INFORMATION Hawaii Ameriquest customers may contact the state Office of Consumer Protection at 587-3222 on Oahu with questions about the settlement. Kauai consumers may call 274-3141, followed by 7-3222#. Maui consumers may call 984-2400, followed by 7-3222#. Consumers on the Big Island may call 974-4000, followed by 7-3222#, and those on Lanai and Molokai may call 800-468-4644 for information.

Ameriquest has made a name for itself in the lending industry by going after higher-risk loan applicants who do not qualify for prime rates. While the growth of subprime lending has provided more opportunities for homeownership, critics say it also has led to the proliferation of predatory lending practices by creating incentives to approve loans for those who cannot afford them.

Hawaii consumers, who are believed to have taken out about 3,000 Ameriquest loans between Jan. 1, 1999, and Dec. 31, 2005, will be sent forms to process their claims and will be contacted by the state as specific recovery plans are determined, said Christine Hirasa, DCCA public information officer. "We've received several complaints from consumers over the last several years," Hirasa said.

Law enforcement officials and regulators initiated a two-year investigation into alleged predatory lending practices at Ameriquest after receiving hundreds of complaints from borrowers across the country. Consumers, including Hawaii residents, said the company failed to properly disclose prepayment penalties and other loan terms, improperly influenced and initiated home appraisals, and encouraged borrowers to lie about income or employment to obtain loans.

As part of its settlement with a committee of state attorneys general and financial regulators, Ameriquest has agreed to pay $295 million to consumers and make sweeping reforms of alleged predatory lending practices. The company also will pay $30 million to 49 states and the District of Columbia to compensate them for costs of the investigation and provide for more consumer education and enforcement.

It is unclear when customers will get the restitution. The state of Hawaii will receive $310,000 from the company to cover costs of two years of investigation, consumer education and enforcement.

"We believe Ameriquest engaged in a series of unfair and deceptive practices by using high-pressure sales tactics to boost commissions," said Steve Levins, executive director of the Hawaii Office of Consumer Protection. "This landmark settlement sets standards we expect other mortgage lenders to follow."

ACC Capital Holdings Corp., parent company of Ameriquest, acknowledged no wrongdoing yesterday, but said it will strengthen its standards, policies and practices and take steps to better inform consumers and eliminate conflicts of interest in the loan origination and funding processes.

Ameriquest has always had zero tolerance for inappropriate practices and has always worked hard to fix any mistakes, said Aseem Mital, chief executive officer of ACC Capital Holdings.

"We're now putting into place even more stringent standards and institutional safeguards to ensure that our practices meet or exceed our customers' expectations," Mital said.

Mital called the agreement, which provides a framework for new lending policies, "good for consumers and fair to the company."

Ameriquest remains on solid financial footing, he said. "In fact, we believe these customer-friendly measures will help us earn the trust of even more consumers and allow us to compete more effectively for their business," he said.

Headquartered in Orange, Calif., Ameriquest originates and services home-mortgage loans through more than 280 branch offices across the United States. The company and its affiliates employ more than 17,000 associates nationwide, including those at its Honolulu branch office on Bishop Street.

State agencies in Hawaii will determine in the next several months what Ameriquest borrowers in this state are eligible to receive under the terms of the agreement, Hirasa said.

"We are happy to report that borrowers who may have been misled by Ameriquest's questionable practices will see the money they deserve back in their pocketbooks," said Mark Recktenwald, DCCA director.

Borrowers who receive compensation from the state will be barred from participating in any class-action suits against Ameriquest, which in recent years has been named in several lawsuits concerning its lending practices.