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Workers Say Lender Ran 'Boiler Rooms'

Critics say Ameriquest, touted as an industry model, fabricated data, forged documents and hid fees. The company denies wrongdoing.

February 04, 2005|By Mike Hudson and E. Scott Reckard | Special to The Times

* Two ex-workers at an Ameriquest office in Sacramento that focuses on retaining existing customers said people often were solicited to refinance loans that they had for less than two years. In adopting a best-practices standard in 2000, Ameriquest pledged not to resolicit its customers for two years to discourage "flipping," or pushing new loans simply to generate fees and commissions.

Nearly one in nine mortgages made by Ameriquest last year was a refinance of an existing company loan less than 24 months old, according to an analysis of public records by DataQuick Information Systems done at the request of The Times. That was a higher rate than for any of six competitors included in the analysis.

Ameriquest says that it doesn't solicit refinancings from its customers within two years, but that many of its borrowers contact the company on their own seeking a new loan.

* On Jan. 10, the Connecticut Department of Banking said it would seek to bar Ameriquest from doing business in the state for allegedly charging excessive fees and repeatedly violating a state law aimed at preventing loan flipping. Ameriquest is challenging the action.

Consumer activists say the company, a big-time donor to both Democrats and Republicans and the No. 1 contributor to the 2005 Presidential Inaugural Committee, has also been lobbying against state legislation aimed at countering alleged abuses by sub-prime lenders.

"They try to paint themselves as the good guys -- that they've adopted best practices and they're kind of the gold standard for the industry," said Norma Garcia, a California lobbyist for Consumers Union. "But really, when you look at what they're doing to try to fight predatory- lending legislation, it shows exactly where they're coming from."

For its part, Ameriquest has maintained that so-called anti-predatory lending laws hurt the poor by making it harder for them to get credit.

Courting Politicians

Ameriquest executives declined requests for interviews, asking instead for a written list of questions. The company answered some of those questions in writing and also offered a general statement about its practices.

"In its 25-year history, Ameriquest has helped hundreds of thousands of homeowners purchase or refinance their homes, making it possible for them to achieve their financial goals and enhance their quality of life," the statement said. "We are proud of our role in helping increase homeownership to historic levels. We are a nationwide lender and our goal is to be an industry leader.

"Ameriquest pioneered innovative best practices in the mortgage industry," the statement continued. "We have procedures and internal controls in place that are designed to ensure that underwriting standards, pricing policies and property valuations are fair and accurate. We act promptly to resolve any issues that arise."

The company is headed by Chairman Roland E. Arnall, a developer and financier who in 1977 helped found the Simon Wiesenthal Center, a Jewish human rights organization, and served for 16 years on the California State University board of trustees.

Arnall, 65, a media-shy billionaire, has made headlines in recent years by buying a 10-acre Los Angeles estate for $30 million from singer Engelbert Humperdinck and a ranch in Aspen, Colo., for $46 million from movie mogul Peter Guber. Attendees at Arnall's holiday party late last year included Gov. Arnold Schwarzenegger and his wife, Maria Shriver, along with the couple they replaced in Sacramento, Gray and Sharon Davis. Also mingling at the soiree were other politicians from both sides of the aisle, including Atty. Gen. Bill Lockyer, a Democrat.

Ameriquest is among the largest political donors in California, spending $3.8 million in the 2003-04 election cycle on state candidates and ballot measures. Schwarzenegger was the largest benefactor, picking up $1.18 million of the company's money for his various campaign bank accounts, among them his reelection committee and one he uses to promote ballot measures.

In response to the barrage of lawsuits, the company has pointed to signed documents from customers saying they understood the terms of their loans. In a Florida lawsuit seeking class-action status, for example, Ameriquest asserts that the plaintiffs "distorted the actual facts concerning the underlying transactions." The allegation that borrowers didn't receive proper disclosures, Ameriquest says, is "directly belied by the fact that each plaintiff acknowledged in writing that they had received such disclosures."

But the plaintiffs in those cases contend that loan salespeople used fast talk and sleight-of-hand paper shuffling to get them to sign documents without knowing the consequences.

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