Ameriquest Mortgage

Last updated
Ameriquest Mortgage
Industry Investment services
Founded1979;45 years ago (1979)
Orange County, California, U.S. [1]
Founder Roland Arnall
Defunct2007
Fate Chapter 11 liquidation
Successor
Headquarters Los Angeles, California,
United States
Area served
United States
Products
Number of employees
2,000 (2007)
Website Ameriquest Mortgage

Ameriquest was one of the largest United States sub-prime mortgage lenders until its dissolution in September 2007. Among the first mortgage companies employing computers to solicit prospective borrowers and hasten the loan application process, Ameriquest was accused of predatory lending practices by United States banking regulators.[ citation needed ] The company was notable for its promotion of the stated income loan, whereby potential borrowers were allowed to claim income without verification of employment. The proliferation of lending to customers with marginal creditworthiness proved to be not only a key factor leading to the 2007 subprime mortgage financial crisis, but also a catalyst to Ameriquest's own demise. [2] [3]

Contents

Ameriquest was widely known throughout the United States for its promotional activity. It advertised widely on television; flew blimps over football and baseball stadiums; and sponsored the Rolling Stones' A Bigger Bang tour, the Super Bowl XXXIX halftime show, and NASCAR drivers.

History

Ameriquest was founded in 1979 by Roland Arnall, in Orange County, California, as a savings and loan association, or thrift, called Long Beach Savings & Loan. After moving to Long Beach, California and being converted to a pure mortgage lender in 1994, the company was renamed Long Beach Mortgage Co. In 1997, the department that funded loans made by independent brokers was spun off into a publicly traded company that was ultimately purchased by Washington Mutual in 1999.[ citation needed ]

Long Beach Savings & Loan was subsequently reorganized into three divisions under the auspices of ACC Capital Holdings, a private conglomerate owned entirely by Arnall: Ameriquest Mortgage Company (retail banking), Argent Mortgage (wholesale banking), and AMC Mortgage Services (loan servicing).[ citation needed ]

In 2004 alone, Ameriquest was estimated to have originated over $50 billion in new subprime mortgages. [4]

On September 1, 2007, Citigroup completed its acquisition of Argent Mortgage and AMC Mortgage Services, shutting down Ameriquest Mortgage. [5] [6]

Predatory lending allegation

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 own employees to charge these customers an additional fee of as much as 12 percent of the loan amount. As part of the settlement, Ameriquest agreed to use the educational fund to train its employees in proper mortgage techniques and to refrain from utilizing predatory lending techniques, but only within the State of California. [7]

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.[ citation needed ] [5]

In February 2005, reporters Michael Hudson and E. Scott Reckard broke a story in the Los Angeles Times about "boiler room" sales tactics at Ameriquest. Their investigation found evidence that the company had undertaken 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 August 1, 2005, Ameriquest announced that it would set aside $325 million to settle investigations by 30 state attorneys general into allegations that it had preyed on borrowers by offering loans with hidden fees and balloon payments. [8] In at least five of those states—California, Connecticut, Georgia, Massachusetts, and Florida—Ameriquest had already settled multimillion-dollar suits. Federal Housing Administration commissioner Brian Montgomery stated that the 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". [8]

On June 13, 2007, lawyers for borrowers seeking class status asserted in a filing with the District Court for the Northern District of Illinois that "assets of the Ameriquest entities were transferred to Arnall with the actual intent to hinder, delay, or defraud the plaintiffs in this action." [9]

Former Ameriquest employees alleged that they were pushed to falsify documents on bad mortgages and then sell them to Wall Street banks looking to make fast profits. [3] There is growing evidence that such mortgage fraud may have been at the heart of the financial crisis of 2007 to 2010. [3]

See also

Related Research Articles

Washington Mutual, Inc. was an American savings bank holding company based in Seattle. It was the parent company of WaMu Bank, which was the largest savings and loan association in the United States until its collapse in 2008.

Predatory lending refers to unethical practices conducted by lending organizations during a loan origination process that are unfair, deceptive, or fraudulent. While there are no internationally agreed legal definitions for predatory lending, a 2006 audit report from the office of inspector general of the US Federal Deposit Insurance Corporation (FDIC) broadly defines predatory lending as "imposing unfair and abusive loan terms on borrowers", though "unfair" and "abusive" were not specifically defined. Though there are laws against some of the specific practices commonly identified as predatory, various federal agencies use the phrase as a catch-all term for many specific illegal activities in the loan industry. Predatory lending should not be confused with predatory mortgage servicing which is mortgage practices described by critics as unfair, deceptive, or fraudulent practices during the loan or mortgage servicing process, post loan origination.

<span class="mw-page-title-main">Community Reinvestment Act</span> US federal law

The Community Reinvestment Act is a United States federal law designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods. Congress passed the Act in 1977 to reduce discriminatory credit practices against low-income neighborhoods, a practice known as redlining.

ACC Capital Holdings (ACCCH) was a national mortgage lender based in Orange, California. The company is the largest privately held retail mortgage lender in the United States and the largest subprime lender by volume. ACCCH was founded by Roland Arnall.

<span class="mw-page-title-main">Roland E. Arnall</span> American businessman and diplomat (1939–2008)

Roland E. Arnall was an American businessman and diplomat. As the owner of ACC Capital Holdings, he became a billionaire with Ameriquest Mortgage. Additionally he funded, financed and was the visionary and co-founder of the Simon Wiesenthal Center, and from 2006 until shortly before his death he was the United States Ambassador to the Netherlands.

H.F. Ahmanson & Co. was a California holding company named after Howard F. Ahmanson Sr. It was best known as the parent of Home Savings of America, once one of the largest savings and loan associations in the United States.

New Century Financial Corporation was a real estate investment trust that originated mortgage loans in the United States through its operating subsidiaries, New Century Mortgage Corporation and Home123 Corporation.

Mortgage fraud refers to an intentional misstatement, misrepresentation, or omission of information relied upon by an underwriter or lender to fund, purchase, or insure a loan secured by real property.

In finance, subprime lending is the provision of loans to people in the United States who may have difficulty maintaining the repayment schedule. Historically, subprime borrowers were defined as having FICO scores below 600, although this threshold has varied over time.

<span class="mw-page-title-main">Subprime mortgage crisis</span> 2007 mortgage crisis in the United States

The American subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. The crisis led to a severe economic recession, with millions losing their jobs and many businesses going bankrupt. The U.S. government intervened with a series of measures to stabilize the financial system, including the Troubled Asset Relief Program (TARP) and the American Recovery and Reinvestment Act (ARRA).

A stated income loan is a mortgage where the lender does not verify the borrower's income by looking at their pay stubs, W-2 forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at their word. These loans are sometimes called liar loans or liar's loans. Stated income loans were originated by Ameriquest.

<span class="mw-page-title-main">Angelo Mozilo</span> American banker (1938–2023)

Angelo Robert Mozilo was an Italian American mortgage industry banker who was co-founder, chairman of the board, and chief executive officer of mortgage giant Countrywide Financial until July 1, 2008. Mozilo retired shortly after the sale to Bank of America for a total of $4.1 billion in stock The company's status as a major lender of subprime mortgages made it a central player in a subsequent mortgage crisis which collapsed the industry, bursting a housing bubble which had accumulated throughout the 2000s, and contributing heavily to the Great Recession. Mozilo later paid over $67 million in fines to settle a series of federal charges related to his conduct at the company. While Mozilo is often mentioned in connection with the 2008 housing crisis, he remains highly regarded among many mortgage and housing industry leaders and insiders.

The subprime mortgage crisis impact timeline lists dates relevant to the creation of a United States housing bubble and the 2005 housing bubble burst and the subprime mortgage crisis which developed during 2007 and 2008. It includes United States enactment of government laws and regulations, as well as public and private actions which affected the housing industry and related banking and investment activity. It also notes details of important incidents in the United States, such as bankruptcies and takeovers, and information and statistics about relevant trends. For more information on reverberations of this crisis throughout the global financial system see 2007–2008 financial crisis.

This article provides background information regarding the subprime mortgage crisis. It discusses subprime lending, foreclosures, risk types, and mechanisms through which various entities involved were affected by the crisis.

Government policies and the subprime mortgage crisis covers the United States government policies and its impact on the subprime mortgage crisis of 2007-2009. The U.S. subprime mortgage crisis was a set of events and conditions that led to the 2007–2008 financial crisis and subsequent recession. It was characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages. Several major financial institutions collapsed in September 2008, with significant disruption in the flow of credit to businesses and consumers and the onset of a severe global recession.

First Franklin Financial Corp., not to be confused with 1st Franklin Financial Corporation, was a San Jose, California-based home mortgage lender that specialized in subprime loans. It had been owned by two of the biggest casualties of the subprime mortgage crisis, National City Corp. in Cleveland and Merrill Lynch.

Golden West Financial was the second-largest savings and loan association in the United States, operating branches under the name of World Savings Bank.

Michael Hudson is a Pulitzer Prize-winning American investigative journalist. He is currently head of investigations at the Guardian US.

<span class="mw-page-title-main">2007–2008 financial crisis</span> Worldwide economic crisis

The 2007–2008 financial crisis, or the global financial crisis (GFC), was the most severe worldwide economic crisis since the Great Depression. Predatory lending in the form of subprime mortgages targeting low-income homebuyers, excessive risk-taking by global financial institutions, a continuous buildup of toxic assets within banks, and the bursting of the United States housing bubble culminated in a "perfect storm", which led to the Great Recession.

Fremont General Corporation was a Santa Monica, California based holding company for Fremont Investment & Loan, an industrial bank that was one of the largest subprime mortgage lenders in the country during the early and mid 2000s.

References

  1. "History of the Lehman Brothers". Harvard University Library-Lehman Brothers Collection. Retrieved 2010-12-01.
  2. Paul Muolo and Mathew Padilla (2 February 2010). Chain of Blame. John Wiley & Sons, 2008, 2010. p. 86. ISBN   978-0-470-55465-4.
  3. 1 2 3 "Road to Ruin: Mortgage Fraud Scandal Brewing". American News Project hosted by The Real News. May 13, 2009.
  4. 1 2 Hudson, Mike; Reckard, E. Scott (February 4, 2005). "Workers say lender ran 'boiler rooms'". Los Angeles Times. Retrieved 26 May 2018.
  5. 1 2 "Ameriquest, a Subprime Lender, Is Closing". The New York Times. Reuters. 2007-08-31. ISSN   0362-4331 . Retrieved 2018-05-15.
  6. Reckard, Scott E. (September 1, 2007). "Citi to buy remains of Ameriquest". Los Angeles Times. No. C-1. Archived from the original on September 10, 2008. Retrieved 26 May 2018.
  7. Simpson, Glenn R. (2007-12-31). "Lender Lobbying Blitz Abetted Mortgage Mess". Wall Street Journal. ISSN   0099-9660 . Retrieved 2022-01-31.
  8. 1 2 Becker, Jo; Sheryl Gay Stolberg; Stephen Labaton (December 20, 2008). "White House Philosophy Stoked Mortgage Bonfire". New York Times.
  9. Reckard, E. Scott (June 19, 2007). "Lawsuit sets sights on Ameriquest founder". Los Angeles Times. Retrieved 28 May 2018.