Iowa is part of a national settlement that will see a California-based mortgage company pay the state about two-million dollars in restitution. Iowa Attorney General Tom Miller led a group of state Attorneys General and financial regulators who brokered the agreement that’ll have Ameriquest Mortgage Company pay a total of 295 million dollars to consumers across the country. Miller says they found a variety of problems in the tactics used by Ameriquest. Miller says one of the things the company did was to try and “up-sell” the loan — or sell them a loan for a higher interest rate and or higher charges than the person had been approved based on their credit history.
Miller says the salespeople were given incentives for “up-selling.” He says the more the company overcharged the consumer, the more the salesperson got paid. Miller says there was also a culture of “doing whatever it takes to sell, sell, sell, and that created a lot of violations.”
Miller says there were also a variety of problems with the appraisals used by Ameriquest. Millers says homes were appraised higher, in some cases much higher than they were worth to accomplish the loan. He says the company also made up income when the customer didn’t have enough income to justify the loan. Miller says there were also problems with the prepaid periods and interest rates on the loans.
Miller says this settlement is leading the company to change. He says they believe some of the changes have already been made and that the company doesn’t want to go through this again. Miller says the company will continue to be monitored by the Attorneys General. Miller says Ameriquest knows it could be shut down with further violations.
Miller says the money will be paid back to customers in two pools, including one for customers going back to 1999.He says the first pool of 175-million dollars will be a national pool and people will be notified and respond if they want to participate, and will receive a minimum of a 600-dollar restitution payment. Miller says the second pool of 120-million dollars will be distributed among the states based on a variety of factors including the amount and number of the loans. Miller says just over 55-hundred Iowans had loans involved in the settlement.
Miller says the two-million dollars is the largest consumer restitution paid in state history. Miller joined Attorneys General from across the country in Los Angeles, California today for the settlement announcement.