The Center for Responsible Lending applauds a $325 million settlement between a team of state attorneys general and Ameriquest Mortgage Co. to end abusive lending practices.
Today's agreement shows that states play a key role in fighting predatory lending, said Deborah Goldstein, executive vice president of the center, a non-profit research and advocacy group.
"The states are quicker to identify new predatory lending abuses and protect borrowers from losing their homes," Ms. Goldstein said. "Here is a good example of this principle at work.
"We congratulate the attorneys general who, with other state officials, are at the forefront of fighting abuses in the subprime mortgage market."
Ameriquest and two other units of the Orange, Calif. parent company ACC Capital Holdings Corp. agreed to centralize its appraisal process so loan officers cannot pressure appraisers to inflate property values; to remove incentives for loan officers to gouge borrowers by charging excessive prepayment penalties and upfront fees without cutting the interest rates, as they had promised borrowers; and to prevent discrimination by proving the same interest rates and discount points to similar customers.
Hundreds of homeowners around the nation complained the abuses detailed in the settlement pushed them into foreclosure, bankruptcy and ruined their credit after they got loans they were unable to pay.
Even as the states take the lead in protecting their citizens in the booming sub-prime mortgage market, where many blue-collar people borrow, a bill awaiting action in Congress would hamstring them. The Ney-Kanjorski bill, introduced by Ohio Republican Bob Ney and Pennsylvania Democrat Paul Kanjorski, would gut strong state laws and weaken even the current federal law.
"You couldn't make a better argument than the attorneys general have just made that the states need the room to deal with mortgage abuses directly," said Goldstein. "As the subprime market has grown, abuses have exploded. The states and the federal government should work together to curb predatory lenders."
Contact: Michael Flagg at 202-349-1862 or mike.flagg@responsiblelending.org