AmeriQuest borrowers try to rebound

by Jordan Green

While consumer advocates say strong consumer-protection legislation passed by the NC General Assembly in 1999 likely minimized the number of North Carolinians abused by AmeriQuest Mortgage Co., at least a handful of Guilford County residents are revisiting mortgages taken out with the Southern California company that led to home foreclosures and financial crisis, and questioning whether they might have received a raw deal.

As previously reported in YES! Weekly, AmeriQuest agreed to pay $295 million to refund thousands of home finance borrowers in 49 states and the District of Columbia who were allegedly defrauded by the company. Attorneys general in every state except Virginia, where the company didn’t operate, began investigating AmeriQuest in 2004 after receiving hundreds of complaints, including 15 from North Carolina, according to a statement by NC Attorney General Roy Cooper. The attorneys general received complaints about AmeriQuest making unsolicited refinancing offers that hid prepayment penalties, giving prospective borrowers inflated property appraisals, and encouraging them to lie about income or employment to obtain loans.

Cooper said the AmeriQuest agreement ranked as the second largest federal or state consumer protection settlement in history. Less than 1 percent of the money will be refunded to North Carolina borrowers. According to Cooper’s office, about 6,000 consumers in North Carolina will divvy up $1.5 million.

One borrower, 80-year-old Govan Tate of Greensboro, had not previously known about the settlement. In fact, he said he was unaware that he had even entered into a loan agreement with AmeriQuest until he received a notice in the mail that his home was about to be put up for foreclosure sale. He said he did recall receiving solicitation calls from the company.

“I told them people I did not want no loan because I was not working,” said Tate, who does not read. “The only place I ever signed anything was with my son-in-law in my living room. I ain’t been in no AmeriQuest office. Only place I have been is at the courthouse trying to straighten this out.”

The signatures of Tate and his stepson, Leo Pearson, are on a loan agreement made with AmeriQuest in April 2005. The loan agreement refinanced Tate’s house at an initial interest rate of 11.8 percent, which the agreement stipulated could be adjusted every six months and could reach as high as 17.8 percent. Guilford County special proceedings hearing officer Wanda Locklear has now signed two orders to allow the sale of Tate’s house to go forward, the last one being scheduled for Oct. 3, but Tate said the special proceedings office has delayed action for another 30 days.

Walter T. Brown Sr., formerly a Methodist chaplain at NC A&T University, also ended up with an AmeriQuest home loan before and fell behind on monthly payments. Ultimately, he switched to another mortgage company, fell ill and died, after which his home was foreclosed, his son said. Walter T. Brown Jr., an Army veteran who is studying for a master’s degree in agriculture at A&T, said he believes AmeriQuest targeted elderly people for loans, although he acknowledged that a family member was present when his father signed the loan agreement.

“His reasoning skills were not sharp,” Brown said of his father, who died in 2004 at the age of 91. “I don’t think he really understood the contract. His credit score was not really as bad as they said it was.”

Brown said his father took out a fixed rate mortgage at 9.9 percent interest with AmeriQuest in late 1999. The elder Brown went into arrears on his payments, his son said, because AmeriQuest insisted that he pay an extra $200 for property insurance even though the house was already insured through another company.

“By the time they received a letter from his insurance company they didn’t subtract the payment,” Brown said. “I shouldn’t have even had to have the insurance company send that verification to them. They should have had it already.”

With the help of a credit counselor Brown got his father out of the mortgage agreement with AmeriQuest and refinanced the house with Equity One. Their problems didn’t end there, however, and Brown said that as executor of his father’s estate he is planning to file a lawsuit against Equity One.

Other borrowers have complained that AmeriQuest inflated their property appraisals to allow them to qualify for loans they should have not received, resulting in their falling further into debt.

Annette and Robert Marshall borrowed $48,000 from Bank of America to purchase their home in High Point. Behind on bills they applied for a consolidated loan from AmeriQuest in 2005. The loan provided them with $14,000, but with the adjustable rate mortgage set at 11.7 percent their monthly payments went up from about $400 to $775. Annette Marshall said the couple has been informed that they should expect an upward adjustment in their interest rate in July 2007.

“We were supposed to contact AmeriQuest six months later to allow them to lower our interest rate, which is a 11.7 percent adjustable rate mortgage,” Annette Marshall said. “Before we could do so they sold our mortgage to another company. AmeriQuest appraised our mortgage at $90,000 at that time. However, when we have been trying to get other mortgage companies to refinance our house they tell us that our mortgage would not appraise high enough; it will only appraise $60,000.”

Marshall said representatives of other mortgage companies have told her that for her home to be valued at $90,000 it would have to contain an extra 1,000 square feet suggesting to her that AmeriQuest misrepresented the house size to artificially inflate its value. Since the Marshall’s owe $76,000 on their mortgage any company that agreed to refinance their house at its true value would do so at a loss.

“We are having trouble making the payments because my husband’s the only one working, and I’m on disability,” Marshall said.

Robert Marshall, who is six years his wife’s senior, works as a receiver at a Lowe’s home improvement center.

The Marshalls are typical of AmeriQuest consumers who tend to come to the company with preexisting credit challenges. Announcing the settlement in January, Attorney General Cooper stated: “AmeriQuest primarily makes refinancing loans to homeowners who are hoping to save money on monthly payments by consolidating credit cards and other debt into a new home mortgage.”

Details about which borrowers will be eligible for refunds are still being worked out. Noelle Talley, a spokeswoman for the NC Attorney General, directed inquiries to a website set up by Minneapolis-based Rust Consulting Group ( Rust Consulting is a claims administration service contracted by the state attorneys general to handle the settlement.

Two separate funds are being established: one for consumers who took out mortgages with AmeriQuest between Jan. 1, 1999 and Dec. 31, 2003, and another for consumers who took out mortgages as late as Dec. 31, 2005. Each state is working out its own criteria for eligibility, the website states.

Letters to borrowers eligible for refunds could be sent out as early as January. At that time the borrowers will be informed of the minimum amount of money for which they are eligible. The website suggests that borrowers who believe they are eligible but who do not receive a letter of notice should contact Rust Consulting by March 2007.

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