Washington State Department of Financial Institutions

News Release

Joint Release from ATTORNEY GENERAL ROB MCKENNA and DEPARTMENT OF FINANCIAL INSTITUTIONS

For Immediate Release
January 23, 2006

Washington Homeowners to Receive Millions in Ameriquest Settlement

National media briefing conference call at 11:15 a.m. PST
Call-in number: 888-982-7409
Enter Passcode: 4356635
Attorney General Rob McKenna, Assistant Attorney General Dave Huey, and Chuck Cross, Director of Consumer Services for the Department of Financial Institutions, will participate.

OLYMPIA – Attorney General Rob McKenna and the state Department of Financial Institutions (DFI) today 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.

Today's 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 -- the majority, of which, will be funneled to consumers.

"The Attorney General's Office and the Department of Financial Institutions have a history of working together to enforce Washington’s consumer protection laws,” Governor Chris Gregoire said. "Just two years ago, Washington led the nation in similar actions against Household Financial. Now, we firmly repeat our message to the industry – when companies take advantage of Washingtonians, we take action."

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 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.

"Ameriquest's technique of misleading consumers preyed on some of 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."

McKenna said the settlement not only is a victory for consumers, but for the entire free-market economic system.

"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.

In the agreement, Ameriquest denied all allegations raised by the states but agreed to:

Consumers do not need to take any action at this point to pursue recoveries. Those eligible for restitution will be notified by letter within the next year as specific recovery terms and plans are determined. Consumers are asked to be patient; administration of a settlement of this size is a complex and time-consuming task.

McKenna, Assistant Attorney General David Huey and DFI’s Director of Consumer Services Chuck Cross, flew to Los Angeles to announce the settlement on Monday. They were joined by attorneys general and financial investigators from six of the 48 other states that participated in the settlement.

About Ameriquest
Ameriquest has headquarters in Orange County, California, and is the nation’s largest privately held retail mortgage lender. The company has more than 270 branches, including 26 in Washington. Ameriquest-operated businesses in Washington include Ameriquest Mortgage Company, Town & Country Corporation, and AMC Mortgage Service (also known as Bedford Home Loans).

Additional information about the Ameriquest settlement is available online at www.atg.wa.gov and www.dfi.wa.gov.

Media Contacts
Scott Kinney, Director of Communications, DFI, 360-902-0517
Kristin Alexander, Public Information Officer, Attorney General’s Office, (206) 464-6432

Interview Opportunities
For interviews with Washington consumers who received Ameriquest loans, contact Kristin Alexander at (206) 464-6432.

DFI