Nonbank lender accused of abusing customers
By Kevin G. Hall | McClatchy Newspapers
WASHINGTON — Mortgage brokers and nonbank lenders, largely unregulated on the federal level, are getting close congressional scrutiny now.
Here's why:
Testimony at a Senate hearing June 26 purported to detail how some mortgage lenders abuse customers. In an affidavit involving a Minnesota lawsuit against Ameriquest Mortgage Co., the nation's largest sub-prime lender, former account executive Mark Bomchill outlined what he said were practices at the branch office in Plymouth, Minn.
"I was taught and encouraged to close loans without regard to the customers' financial ability to make payments on the loan," Bomchill said. He said salespeople at the firm were encouraged to "engage in any conduct necessary to close the loan, to close the loan as quickly as possible and to maximize the loan amount."
Bomchill said Ameriquest taught employees to:
- Lie to borrowers about their credit scores.
- Tell customers they'd be refused loans elsewhere.
- Obfuscate and conceal prepayment penalties.
- Hide adjustable rates by calling loans "fixed adjustable."
- Conceal fees, interest rates and real monthly-payment amounts.
- Hide the fact that loan quotes didn't include escrow payments.
"The behavior he describes, if it occurred, is a serious violation of our policies and practices," said Chris Orlando, an Ameriquest spokesman in Orange, Calif. "Ameriquest has a zero tolerance for fraud, and when we discover an employee involved in fraudulent activity we take decisive action."
Ameriquest is a nonbank lender with no direct federal regulation. In January 2006, it consented to a $325 million settlement with 49 states, agreeing to overhaul its business practices.
The company's founder, Roland Arnall, was a major campaign contributor to President Bush, who appointed him ambassador to the Netherlands last year.
Arnall is now a target of a class-action suit that seeks to hold him responsible for illegal actions allegedly carried out by Ameriquest employees.
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