Ameriquest to pay millions to mortgage customers
January 24, 2006
By Emily Heffter
Times consumer-affairs Reporter

Thousands of Washington homeowners who were saddled with higher-than-expected mortgage payments because of Ameriquest's lending practices should get some money back as part of a $325 million nationwide settlement.

A 49-state investigation led by Washington and six other states found that from 1999 to 2003, Ameriquest inflated home appraisals and made up employment and income information to allow more people to qualify for loans. Some borrowers lost their homes because of it. Others went deeper into debt trying to keep up with their mortgage payments.

According to the states' joint investigation, Ameriquest paid bonuses to employees who approved loans at higher rates and tacked on extra fees. Company managers even encouraged loan officers to watch the movie "Boiler Room" to hone their high-pressure sales tactics, the Attorney General's Office said.

The agreement is the second-biggest consumer settlement in U.S. history. In 2002, Washington led 44 states to a $484 million settlement with Household International.

In that deal, about 11,000 Washington customers were eligible for restitution after they succumbed to similar tactics. Many of them had to abandon their homes as well.

Ameriquest hasn't admitted any wrongdoing, but agreed to pay $295 million in restitution to customers, plus $30 million to help cover legal costs. And it agreed to better disclose the terms of loans to customers and to change some of its internal policies.

"Doing the right thing for the people we serve has always been one of our core values," Aseem Mital, chief executive officer of Ameriquest's parent company, said in a statement. "We regret those occasions when our associates have not met this ideal to our customers' expectations."

Ameriquest loaned $2.7 billion to nearly 13,500 Washington residents between 1999 and 2005. Those customers will split about $6.5 million in restitution, based on how much they lost. They will have to continue paying their loans.

Jeff and Cheryl Busby, who refinanced with Ameriquest about three years ago, were forced to sell the Green Lake home that had been in Cheryl Busby's family since the Depression.

The couple had refinanced their $100,000 mortgage after an Ameriquest solicitor said they could lower their payment from $1,400 a month to $1,000. But when they got their first bill, it was for $2,472 a month — much more than they could afford on their fixed income. Jeff Busby is a retired schoolteacher and his wife works as a caregiver.

They later learned that an Ameriquest lender had lied about their income — even including a fake "Busby's Auto Sales" business card in their loan application — to qualify them for a larger loan.

After six months of struggling to make the payments, the Busbys sold their home for less than it was worth and rented an apartment.

"It just was really difficult," Jeff Busby said. "We're suing Ameriquest for the fact that we lost everything."

The Busbys' attorney, Melissa Huelsman, said her clients will likely stick with their private lawsuit rather than accept the state's settlement and waive their right to sue Ameriquest separately.

"I do not think it's enough, but I think it's never enough in these types of settlements," Huelsman said.

State regulators acknowledged that the settlement won't reimburse customers for all they lost. But they stressed that the tighter standards Ameriquest is being forced to adhere to will become an industry standard.

"The message we're sending to the subprime mortgage industry is very clear," Washington Attorney General Rob McKenna said. "We expect them to behave ethically."

Emily Heffter: 206-464-8246 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

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