Defunct mortgage lender Ameriquest Mortgage Co. began mailing out restitution checks to thousands of borrowers nationwide yesterday as part of a settlement involving alleged predatory lending practices.
The Orange, California-based subprime lender signed the settlement in 2006 with 49 states and the District of Columbia to provide $295 million in consumer restitution for its participation in various unlawful mortgage lending practices.
The settlement resolves a number of offenses, including allegations that Ameriquest misrepresented or did not adequately disclose the terms of home loans, charged excessive loan origination fees and prepayment penalties, refinanced borrowers improperly, and falsely inflated loan appraisals to facilitate loan qualification.
“Many of the consumers involved in this case had modest incomes or poor credit, and were forced to pay higher interest rates and larger monthly payments than they had initially been led to believe,” Pennsylvania Attorney General Tom Corbett said in a news release.
Payouts ranged anywhere from around $100 to several thousands dollars, based on the type of loan and other loan characteristics, along with criteria set by the borrower’s home state.
In July, about 60 percent of the consumers who were notified of their eligibility for compensation responded to claim forms.
By doing so, they relinquished their rights to file lawsuits related to the loans in question, but can still raise claims if their homes go into foreclosure.
The $295 million national settlement involves more that 312,000 borrowers throughout the United States who obtained loans from Ameriquest between January 1999 and December 2005.
The settlement includes parent company, ACC Capital Holding Corp., and ACC’s subsidiaries, Town & Country Credit Corp. and AMC Mortgage Services Inc.