Nearly 25,000 homeowners across the state could receive restitution from Ameriquest Mortgage Co. and its subsidiaries as a result of a $325 million settlement announced in January 2006, state regulators said.
Under the settlement agreement, which ended a multistate investigation into allegedly predatory lending practices, Ameriquest will pay $295 million for restitution, divided into two funds.
The first, a $175 million pool, will be distributed under a nationwide formula to most consumers who received an Ameriquest loan between Jan. 1, 1999 and April 1, 2003. The second fund, for $120 million, is to be divided among the states based on how many loans Ameriquest made in each state, with each state then distributing its total at its discretion to consumers who received loans between Jan. 1, 1999 and Dec. 31, 2005.
Eligibility is based on specific information in a consumer's loan files and payment history, which would indicate whether the consumer experienced fraudulent and illegal practices and suffered harm.
The 49-state investigation, led by former state Attorney General and now Gov. Eliot Spitzer and the state Banking Department, found that Ameriquest used "predatory and illegal" practices to sell refinance mortgages by misrepresenting or failing to disclose loan terms, charging excessive loan origination fees, and inflating appraisals.
Besides the payments, the company must modify its practices and submit to monitoring by states for five years.
Restitution notices were mailed out to consumers last week, indicating the minimum amount they might receive and how to proceed. Acceptance forms and releases giving up their right to sue must be mailed by Sept. 10.
The actual amount of individual restitution will depend on how many eligible New Yorkers decide to participate.
"This action is an example of what states can accomplish through collaborative efforts between regulatory bodies and state Attorneys General," said New York Banking Superintendent Richard Neiman.
"Subprime lending is still a significant issue for borrowers and communities in New York, and we look forward to continued coordinated efforts to address mortgage fraud and predatory lending practices," he said.