Inner City Press Community Reinvestment Report - August 1, 2005

Ameriquest Jumps AGs’ Gun, Offers $325 Million in Predatory Settlement

            On the afternoon of July 28, Ameriquest disclosed that it is setting aside $325 million, saying this is “is based on extensive discussions with the states and represents the company's best estimate of its maximum financial liability for a comprehensive resolution of this matter."

            The immediate question was: why did Ameriquest jump the gun and announce a settlement before the AGs did?  A cynic inferred that Ameriquest was still negotiating, making this figure public to put pressure on (some) AGs to accept it.  But from Des Moines, the Iowa Attorney General issued this statement: "We understand that Ameriquest has announced that related to our discussions it has recorded a provision of $325 million in its financial statements. The states do not disagree with Ameriquest's actions in this regard."

            Ameriquest claims it was required to make the disclosure, even though it is not a publicly-traded company, in connection with a bond prospectus. Perhaps. Another cynic noted that on the same afternoon, the White House formally nominated Ameriquest’s owner to become U.S. ambassador to The Netherlands. Low lands indeed...  Meanwhile, also on this same afternoon, the Texas Attorney General’s Office’s letter extending its time to rule on the Freedom of Information / Public Information Act request for the 41 boxes of documents about Ameriquest being withheld by that office was received by the requested, Inner City Press. (No cynics here -- just stoics).

            The more substantive question is how meaningful the reforms / consent decree might be, and how they would be enforced.  Also, it’s worth nothing that while this figure is below the $484 million paid by Household International, Ameriquest’s volume of subprime mortgage loans is higher (highest, in 2004).  There are doubts and questions about this settlement, that will be answered and/or addressed (even, attacked) once despite this lurching process it become public.

   While Ameriquest seeks to settle on the cheap with state attorneys general, Inner City Press received last week additional complaints against Ameriquest, including by consumers who had purportedly been made whole by Ameriquest.  The consumer wrote to Ameriquest’s Lori A. Maimone on Town & Country Road: “Please note that I am totally dissatisfied with the settlement...I really had no choice but to accept your offer as my attorney wanted most of the loan proceeds as retainer to pursue this... We will be looking to refinance as soon as possible again as we do not want to do business with Ameriquest for any length of time. Had I known this would turn into such a mess, I would have pursued any of several other offers I had received.”

            Ameriquest responds with respect to this “purported dissatisfaction with the settlement, Ameriquest has no comment.” 

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