$2.5m headed for N.H. in Ameriquest deal

If you took out a mortgage from Ameriquest Mortgage Company during the past six years, you may be entitled to a piece of a $325 million national settlement over the sub-prime lender’s alleged predatory lending practices.

The settlement was announced yesterday in New Hampshire by Banking Commissioner Peter Hildreth and Attorney General Kelly Ayotte.

New Hampshire — as one of the 49 states participating the settlement — will receive about $2.6 million, with an estimated $1.7 million going directly to Ameriquest borrowers. Since that has to be spread among about 6,000 or so borrowers in the state, the average award will be roughly $250 per mortgage. Some borrowers will get more, especially those who refinanced several times. But if the loan was taken out after 2003, the average will be slightly more than $170. And it might take as long as a year to get to the borrowers.

“That won’t make that big of a difference,” said Dinah Haycock, who refinanced her Epsom manufactured home though Ameriquest in 2004. As reported last summer by NEW HAMPSHIRE BUSINESS REVIEW, the refinancing drove her loan amount up from $52,000 to $72,000, thanks to the inclusion of existing debt and closing costs, and her monthly payments ended up going up, not down, under the adjustable rate mortgage.

She said she is now behind on her loan payments by some $3,000 (though she disputes half that amount), and she said she has been warned that she could face foreclosure proceedings in the near future..

Haycock was one of the 23 Ameriquest borrowers who complained to the state Banking Department about Ameriquest’s lending practices since 2001.

Sub-prime loans go to borrowers who would have trouble getting a traditional loan, often at higher interest rates and less favorable terms. Such sub-prime loans are growing in popularity among all lenders, and Ameriquest – based in Orange County, Calif. – is the largest sub-prime lender of them all. The company aggressively markets the loans with heavy telemarketing and media advertising, such as its sponsorship of last year’s Rolling Stones concert tour.

But regulators have charged that the company has been too aggressive. The firm is not fully disclosing loan terms, slipping in hidden loan fees, approving some loans by distorting a person’s income or value of his or her home in order to make the loan and by pressuring overextended homeowners to refinance loans they could not maintain, they say.

“Our view was that Ameriquest employees deceived consumers as part of high-pressure tactics to sell mortgage refinances,” Attorney General Ayotte said. “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. “

Ameriquest has denied this, or at least that any deceptive practices were part of any company-wide policy. The company has maintained that it has corrected most of the practices.

The $325 million settlement is was second in size only to a $484 million settlement involving unfair mortgage practices agreed that was reached in 2002 with Household International.

Some $295 million will go directly to borrowers. The rest goes to reimburse the states for cost.

New Hampshire will get a little larger portion of its settlement $900,000 – more than one third – because the commissioner contributed more to data collection and negotiation than other states. That leaves roughly $1.7 million. Almost half of that money will go to those whose loans were closed before Jan. 1, 1999, through April 1, 2003.

The settlement also includes Ameriquest affiliates, Town & Country Credit Corp. and AMC Mortgage Services Inc., formerly known as Bedford Home Loans.

“We fully expect Ameriquest will comply with our laws in the future,” Banking Commissioner Hildreth said. “There are valid reasons to believe this. Ameriquest has instituted many changes already. They do not want to repeat the experience that we are concluding today, and the states and a monitor will be watching them carefully.” — BOB SANDERS

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