Defunct Ameriquest settles class-action lawsuits

Ameriquest one of the country’s leading subprime lenders prior to the mortgage crash has agreed to settle twenty nine class-action lawsuits regarding predatory lending. Ameriquest has pledged twenty two million dollars in order to pay distressed borrowers and the lawyers that represent them. Ameriquest went defunct due to payments it made previously to settle prior lawsuits and the meltdown of the mortgage industry.

The settlement will affect roughly some seven hundred thousand borrowers. The loans involved in the settlement are mainly from the company’s subsidiary company Argent Mortgage Co… Argent Mortgage Co. obtained its mortgage loans largely through mortgage brokers.

The proposal which was filed last month in United States District Court in Chicago affectively bars all parties involved from discussing its terms. The terms however can be located at and borrowers involved in the settlement were sent letters detailing the terms of the settlement last week.

The settlement sorts claims into different categories as is customary in most court settlements. The categories included in the Ameriquest settlement include predatory lending via high interest rate when a lower rate was promised by more than nine tenths of a percentage point; predatory lending via variable rate when a fixed rate was promised and predatory lending via excessive upfront charges. The settlement further will affect loans made to borrower dating as far back as December 14, 2001.

The settlement will not include those borrowers who obtained individual settlements previously and / or class action settlements previously made. Settlements that have been previously made include the three hundred twenty-five million dollar settlement back in 2006 were Ameriquest used the settlement to halt an investigation launched by forty-nine of the fifty states United States Attorney Generals. The Attorney Generals alleged that Ameriquest sought to deceive its borrowers, pressured appraisers to overstate property values and falsified mortgage documents.  Another settlement that will not be included involved a fifty million dollar settlement from 2005 were a private party filed suit in San Mateo County on behalf of California, Texas, Alabama, and Alaska borrowers. The brought on by the United States Attorney Generals provided an average payout to borrowers involved in the suit of approximately nine hundred dollars to those who accepted it.

The payout of this last settlement will vary depending on the potential damages of each claim and there relative strengths, however it will be a large contrast to the settlement received by borrowers in prior suits. The settlement is currently waiting to be approved by a federal judge but if approved each borrower in the suit would received approximately thirty dollars less ten dollars for administrative cost leaving the potential class-action members with approximately twenty dollars. The legal fees that are proposed to be distributed in the settlement are seven million three hundred thousand dollars.

Benjamin Diehl, Deputy Attorney General for California who helped create the lawsuit involving the states stated that due to the way Ameriquest sold loans by the nature of a non-banking lender; little capital is available and few assets are left from when the company closed its doors. Borrowers from this settlement will be left short of what they deserve.

February 22 is the deadlines for borrowers involved in the settlement to opt out in order to pursue lawsuits on their own. Borrowers who wish to remain in the settlement must complete and submit a claim form by March 9th. Borrowers who do nothing forfeit all rights to pursue damages against the company and receive no monies.

According to class-action lawyers about twenty percent of claim forms are returned on settlements similar to Ameriquest’s. Payouts to borrower would increase to approximately one hundred dollars if that scenario were to happen.

The settlement will not include any assets from the company’s billionaire deceased founder, Roland Arnall who pasted away in 2008. Wall Street firms and their assets will remain unaffected as well in regard to this settlement even though most of those firms were a direct cause to the mortgage meltdown. Their funding of subprime lenders and transforming those loans into securities was a toxic combination that ultimately caused the housing market to crumble. Bettors on Wall Street walked away without even a bruise.

Companies also settling were AMC Mortgage Services Inc., Bedford Home Loans Inc, Town and Country Credit Corp., and Olympus Mortgage Co.

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