| Attorney General Rob McKenna and the state Department of Financial Institutions (DFI) have announced a $325 million nationwide settlement with Ameriquest Mortgage Company. The agreement resolves allegations of widespread fraud by the company as part of a high-pressure scheme to sell mortgages that trapped consumers into debt and put them at risk of losing their homes.
The announcement is the result of a two-year investigation and one year of settlement negotiations. Washington was one of six states that led negotiations. As a result, thousands of Washington homeowners will share approximately $6.5 million in restitution. The Attorney General’s Office and DFI will also receive $2.5 million for legal and investigative costs.
”Ameriquest’s technique of misleading consumers preyed on some our most vulnerable families – those in the sub-prime lending market,” said Scott Jarvis, director of the Department of Financial Institutions. “This investigation puts the mortgage industry on alert that unfair and deceptive practices will not be tolerated in Washington.”
Ameriquest made nearly 13,500 loans totaling $2.7 billion to Washington residents between 1999 and 2005, the period covered by the settlement. DFI received more than 100 complaints about the company’s business practices.
The multi-state investigation turned up what appeared to be a battery of predatory lending practices by Ameriquest that played out like a Hollywood movie. Ameriquest managers allegedly encouraged loan officers to watch the movie “Boiler Room” in order to hone high-pressure sales tactics.
The states alleged that Ameriquest deceived consumers, inflated home appraisals, and fabricated employment and income information in order to make the largest possible profit. Consumers were tied into loan balances significantly higher than the true value of their homes, which ultimately blocked them from refinancing with other lenders or selling without taking a substantial loss.
McKenna, Assistant Attorney General David Huey and Chuck Cross, DFI’s director of Consumer Services, announced the settlement at a press conference in Los Angeles. They were joined by attorneys general and financial investigators from six of the 48 other states that participated in the settlement.
“Ameriquest can be commended for coming to the table to negotiate a pact that should transform the company into a model for other lenders,” McKenna said. “Ameriquest’s prominence among mortgage providers makes this a particularly important case for establishing tough, new standards for the home financing industry. Financial companies and consumer advocates should seize the opportunity to educate homebuyers about ethical lending practices.”
The $325 million payment ranks as the second-largest state or federal consumer protection settlement in history. | 
