by Bradley Parsons
Staff Writer
A recent $325 million settlement between attorneys general for 49 states and Ameriquest Mortgage Company could produce a windfall for Jacksonville borrowers. But a prominent local consumer attorney said they should be careful before they claim the cash.
As many as 62,000 Florida borrowers might be able to claim a share of the settlement, according to the office of Florida Attorney General Charlie Crist. Florida’s portion of the national settlement is about $19 million so individual shares of the settlement would be worth about $300. The settlement stems from accusations of improper lending practices by Ameriquest. The national lender allegedly inflated service fees and appraisals on homes and routinely pulled a bait-and-switch routine with interest rates, said Lynn Drysdale, a prominent consumer attorney with Jacksonville Area Legal Aid.
Drysdale has successfully prosecuted her own claims against local predatory lenders and helped author legislation to regulate them. Drysdale said Ameriquest is using some of the same lending tactics. That’s potentially dangerous for borrowers because of Ameriquest’s national presence.
Borrowers simply don’t expect such a high-profile company to employ predatory lending practices, she said. Drysdale pointed out that Ameriquest is sponsoring the Rolling Stones’ appearance at this year’s Super Bowl.
“The payday lenders in the neighborhoods, you have a sense of what you’re getting into when you walk in the door,” said Drysdale. “A company like Ameriquest markets itself to everyone. You see their commercials, their name is all over the Super Bowl, and you don’t think of them doing illegal things.”
The California-based company agreed to refund $295 million to borrowers who suffered the predatory practices. The settlement resolves allegations including claims of inflated appraisals, unjustified fees and penalties and deceptive tactics, according to Crist’s office. Ameriquest will also pay $30 million to the states to cover the cost of the investigation and for consumer education and enforcement.
Drysdale said those practices are used to lure borrowers into terms they can’t afford. As part of the settlement, Ameriquest promised to reform its practices that the states alleged amounted to predatory lending.
Crist’s office advised borrowers who might have been affected to wait for contact from the state. They will be advised if they’re eligible to claim a share of the settlement.
But Drysdale advised people to talk to an attorney before seeking their share of the settlement. By agreeing to take the money, the borrower could be giving up a later opportunity to fight foreclosure proceedings if their loan defaults, she said.
JALA is currently prosecuting a pair of actions against Ameriquest. Drysdale said the settlement could benefit those cases. Paying out $300 million might put Ameriquest’s lawyers in a more conciliatory mood, she said.
“Every case is decided on its own merits and we haven’t seen any movement on their side so far,” she said. “But it could potentially change.”
Three-hundred million dollars aside, Drysdale said the settlement’s greatest benefit could be raising awareness of predatory lending nationwide.
“It’s a sign that borrowers need to be very careful,” she said. “A well-known, well-marketed company can still take advantage of consumers.”