One in five home purchase loans made in 2005 by Cleveland’s top mortgage lender are already in foreclosure, according to an investigation by the Cleveland Plain Dealer.
Three years after entering the Cleveland market and becoming the city’s top mortgage lender, California-based Argent Mortgage Co. is under fire from critics who allege the company’s lax lending practices are one reason the city has the highest foreclosure rate in the nation.
Ironically, the investigation found that an anti-predatory-lending law passed by the Cleveland City Council in 2002 likely opened the door for Argent, because some lenders stopped doing business in the city.
Argent entered the Cleveland market in 2003, and within a year had captured 22 percent of the city’s mortgage business, the Plain Dealer reported. In 2004, Argent made twice as many home loans as former market leaders Charter One Bank and Third Federal Savings & Loan combined.
Although the Plain Dealer said other subprime lenders have similar or higher foreclosure rates, Argent wrote more loans and therefore had the greatest impact on the city. The company made 1,258 purchase loans in 2005, 20 percent of which are in foreclosure.
“They’re a bad company that has done some very bad things to the city of Cleveland,” Cuyahoga County Treasurer James Rokakis told the Plain Dealer.
Company spokesman Chris Orlando said Argent doesn’t agree “that … portrayal accurately reflects our efforts in Cleveland.”
The Plain Dealer noted that Argent tightened its underwriting standards last year, rejecting one loan for each it approved. In 2004, Argent approved 11.4 loans for each it rejected, the paper said. The paper was unable to obtain statistics on foreclosure rates for 2004 loans.
Georgia’s state banking department issued a cease-and-desist order against Argent in September 2005, but the company continues to do business in the state after promising to improve monitoring and screening of its mortgage brokers and to implement “common sense underwriting” standards, the Plain Dealer reported.