Ameriquest Mortgage Co. may overhaul its business practices under the eye of an outside monitor to settle allegations by 33 states that it overcharged its home loan customers, according to a draft of the settlement obtained by the Los Angeles Times.
The proposed deal includes a payment of $325 million – $295 million to repay borrowers and $30 million to cover the cost of the states’ investigation, according to a copy of the proposal obtained by the Times.
It would be the second-largest settlement of its kind, after Household International’s $484 million agreement in 2002 with attorneys general for all 50 states, the Times said today.
State officials who negotiated for months with the Orange, Calif.-based lender had hoped that both sides would approve the deal by the end of this week, media reports said. But the current version, the fifth revision of the deal, was written by the states, and Ameriquest isn’t satisfied yet, Iowa Atty. Gen. Tom Miller, the leader of the multistate task force, told the Times.
“Some terms still could change,” Miller told the Times Tuesday, predicting the final agreement won’t be signed until January.
According to the Times, Ameriquest spokesman Chris Orlando said that although the settlement wasn’t complete, the company believed that further discussions would yield a “well thought-out, comprehensive agreement that is good for consumers and fair to the company.”
The draft proposal provides, for the first time, details of provisions that had been described only in general terms by representatives of the company and the states, accounts said.
If accepted, the proposal would reshape Ameriquest’s compensation practices, barring the company from rewarding employees for jacking up loan fees and interest rates and adding penalties for paying off a loan early, the Times reported.
It would also place restrictions on what loan agents can tell borrowers, requiring them for example not to say their loans are “better,” “lower than” or “competitive with” other lenders unless that is true; and attempt to keep Ameriquest loan agents from pressuring appraisers to inflate home values by barring them from discussing valuations with the people performing them and by requiring regular reviews of appraisers’ work, media accounts said.
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