MIDDAY BUSINESS REPORT: Ameriquest settlement notices to be out April
By PAUL WENSKE
The Kansas City Star
Consumers eligible to share in the national $295 million settlement with Ameriquest Mortgage Co. Can expect information about refunds starting in April, say state regulators.
Settlement notices are scheduled to be mailed to eligible consumers in 49 states, including about 10,000 Missouri consumers in line to share $3.2 million and about 2,500 Kansas consumers in line to share about $1.7 million.
? I am pleased that Kansas consumers will finally begin to receive restitution from the Ameriquest settlement,? Kansas Attorney General Paul Morrison said in a statement.
Morrison said the settlement underscored the need to protect consumers from deceptive business practices. Ameriquest focused on making high-risk loans to credit-challenged consumers.
In January Ameriquest, once one of the largest subprime-home refinancers, agreed to settle complaints that aggressive salesmen misled thousands of consumers into high-cost, adjustable-rate loans on homes that were often overvalued because of fudged appraisals.
Consumers also complained they were charged higher closing costs than promised and were locked into prepayment penalties they didn't know existed. As interest rates soared, many loans ended in defaults and foreclosures.
Ameriquest, which settled without admitting wrongdoing, became the visible example of an implosion in the subprime market. The company has closed many offices and is reportedly seeking to sell itself.
Many subprime lenders flew high in using innovative loan gimmicks that charged high interest rates but failed to consider the ability of many borrowers with weak credit to repay the loans.
Nearly two dozen subprime lenders have gone out of business or are facing financial troubles nationally as default rates rise. Kansas City's NovaStar Financial saw its shares plunge last month after reporting a $14.4 million loss in the fourth quarter, compared with a $26.4 million profit a year earlier.
But Ameriquest stands out because of its boiler-room operations in which sales personnel were timed in how long it took them to sell loans over the phone.
The settlement funds are being distributed based on the amount of business Ameriquest did in each state. Consumers have the option to accept the settlement offer or seek resolution themselves.
The settlement benefits consumers who received mortgage loans from Ameriquest between Jan. 1,1999 and Dec. 31.
Eligible consumers are scheduled to receive a notice letter in April identifying the minimum dollar restitution payment they may receive, which is expected to range between $580 and $2,600.
More information on the settlement can be obtained by going to www.ameriquestmultistatesettlement.com.
To reach Paul Wenske, consumer affairs writer, call (816) 234-4454 or send e-mail to [email protected].
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