Ameriquest Mortgage

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Ameriquest was one of the United States' largest sub-prime mortgage lender until it was shut down in September 2007. Its loan origination practices were at the heart of the Financial crisis of 2007–2010.[1] Ameriquest originated the stated income loan, which allowed potential borrowers to state their income without any process of verification. Many of these stated income loans were the catalyst to the ultimate failure of Ameriquest itself, and a key factor in the 2007 subprime mortgage financial crisis.[2]

Prior to its failure, Ameriquest was widely known in the United States through its promotional activity. It advertised widely on television, had blimps that flew over football and baseball stadiums, and sponsored the Rolling Stones (2005 U.S. tour), the Super Bowl XXXIX Halftime show, and NASCAR drivers. Its ad slogan is "proud sponsor of the American dream," and their company motto was to "do the right thing." Additionally, in their commercials, Ameriquest also reiterated more than once that their customers are "more than a number." This is, of course, in reference to potential borrowers who may have had poor credit but were able to find financing with Ameriquest.

Ameriquest was among the first mortgage companies to use computers to search for prospective borrowers and to speed up the loan process and was accused of predatory lending practises by US regulators.

History[edit]

Ameriquest was founded by Roland Arnall in 1979, in Orange County, California, as a savings and loan association, or thrift, called Long Beach Savings & Loan. The bank moved to Orange County in 1991 and was converted to a pure mortgage lender in 1994, and renamed Long Beach Mortgage Co. In 1997, part of the business that funded loans made by independent brokers was spun off as a publicly traded company. This spin-off, which was originally founded as a subsidiary corporation under the name Ameriquest Mortgage, was now renamed "Long Beach Mortgage".

The retail part of the business was renamed Ameriquest Capital, and remained private, solely owned by Arnall. (In 1999, Washington Mutual purchased Long Beach Mortgage.) Ameriquest Mortgage was a private company held by ACC Capital Holdings, also owned by Arnall.

At the time the company stopped originating loans in September 2007, Long Beach Savings & Loan had ultimately become the conglomerate of ACC Capital Holdings. ACC Capital Holdings was divided into three parts: Ameriquest Mortgage Company, the retail division; Argent Mortgage, the wholesale division; and AMC Mortgage Services, which was Ameriquest's failed attempt to become a company that could service other loans besides its own.

On August 31, 2008, Citigroup completed its acquisition of its wholesale origination-lending unit, Argent Mortgage, and its loan-servicing unit, AMC Mortgage Services, and shut down its retail-lending unit, Ameriquest Mortgage.

The home stadium of the Texas Rangers was called Ameriquest Field until March 19, 2007, when in an undisclosed agreement between the two entities, Ameriquest relinquished the naming rights, and the stadium was renamed to the "Rangers Ballpark in Arlington".

Subprime lenders made $587 billion in new mortgages in 2004, up from $390 billion in 2003, according to National Mortgage News. Ameriquest's share of that is estimated at over $50 billion.[3]

On August 31, 2008, ACC Capital Holdings announced that it was closing Ameriquest by no longer taking loans and selling its loan-servicing unit to Citigroup.

Predatory lending allegation[edit]

In 1996, the company agreed to pay $3 million into an "educational fund" to settle a Justice Department lawsuit accusing it of gouging and predatory lending practices against older, female, and minority borrowers. Prosecutors accused it of allowing mortgage brokers and its employees to charge these customers an additional fee of as much as 12% of the loan amount. As part of the settlement, Ameriquest (then still known as Long Beach Mortgage) agreed to use the educational fund to train its employees in proper mortgage techniques (training which most observers agree never actually occurred to any substantial degree[citation needed]), and to refrain from utilizing predatory lending techniques (such as "bicycling"[clarification needed]), but only within the State of California. Shortly after entering into this settlement agreement, the company "switched" names with its subsidiary and began aggressively seeking refinance-mortgage business throughout the United States.

In 2001, after being investigated by the Federal Trade Commission, the company settled a dispute with ACORN, a national organization of community groups, promising to offer $360 million in low-cost loans.

In February 2005, reporters Michael Hudson (reporter) and Scott Reckard broke a story in the Los Angeles Times about “boiler room” sales tactics at Ameriquest. Their investigation found evidence that the lender had in various questionable practices, including “deceiving borrowers about the terms of their loans, forging documents, falsifying appraisals and fabricating borrowers' income to qualify them for loans they couldn't afford.”[4]

On 1 August 2005, Ameriquest announced that it would set aside $325 million to settle attorney-general investigations in 30 states to settle allegations that it had preyed on borrowers with hidden fees and balloon payments.[5] In at least five of those states—California, Connecticut, Georgia, Massachusetts, and Florida—Ameriquest had already settled multimillion-dollar suits. Brian Montgomery, the Federal Housing Administration commissioner said that the Ameriquest settlement reinforced his concern that the industry was exploiting borrowers, and that he "was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans".[5]

In May 2006, Ameriquest Mortgage announced it was closing all of its retail offices and in the future would make its loans through mortgage brokers, a channel that is not covered by the predatory-lending settlement with the Attorneys General.

On June 13, 2007, lawyers for borrowers, who were seeking to combine 20 suits into one class-action suit, asserted in a filing [6] in Illinois Northern District Court that "Assets of the Ameriquest entities were transferred to (the owner of Ameriquest) Arnall with the actual intent to hinder, delay, or defraud the plaintiffs in this action."

The issues confronted by companies like Ameriquest could be a major contributing factor to the rapid rise of Certified Mortgage Planners, certified industry experts that work in concert with Certified Financial Planners in harmonizing the home-finance products utilized by consumers with their larger financial portfolios.

Former employees from Ameriquest, which was the United States's leading wholesale lender,[1] described a system in which they were pushed to falsify documents on bad mortgages and then sell them to Wall Street banks eager to make fast profits.[1] There is growing evidence that such mortgage fraud may be at the heart of the Financial crisis of 2007–2010.[1]

Charity[edit]

Ameriquest operated the Soaring Dreams Fund, which gives money to initiatives that help children. During the 2006 NASCAR Busch Series season, the fund was promoted on race cars, whose designs were picked in a contest.

See also[edit]

References[edit]

  1. ^ a b c d 13, 2009/Road+to+Ruin%3A+Mortgage+Fraud+Scandal+Brewing "Road to Ruin: Mortgage Fraud Scandal Brewing". American News Project hosted by The Real News. May 13, 2009. 
  2. ^ Paul Muolo and Mathew Padilla. Chain of Blame. John Wiley & Sons, 2008, 2010. p. 86. ISBN 978-0-470-55465-4. 
  3. ^ Mike Hudson, E. Scott Reckard (February 5, 2005). "Workers Say Lender Ran 'Boiler Rooms'". The Los Angeles Times. Retrieved October 10, 2010. 
  4. ^ Mike Hudson and E. Scott Reckard, “Workers Say Lender Ran 'Boiler Rooms',” Los Angeles Times, Feb. 4, 2005. www.latimes.com/ameriquest
  5. ^ a b Becker, Jo; Sheryl Gay Stolberg; Stephen Labaton (December 20, 2008). "White House Philosophy Stoked Mortgage Bonfire". New York Times. 
  6. ^ Case 1:2007cv03325 Illinois Northern District Court Miller

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