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Post date: December 24 2007

Governor Spitzer And Attorney General Cuomo Announce More Than 13,000 New Yorkers To Receive Settlements In Predatory Lending Case

New York, NY (December 24, 2007) Governor Eliot Spitzer and Attorney General Andrew M. Cuomo today announced that more than $18 million is being distributed to 13,686 New Yorkers eligible to receive restitution as a result of a $325 million settlement with Ameriquest Mortgage Co. and its subsidiaries stemming from predatory loan practices. Predatory and illegal lending practices that Ameriquest may have used to encourage homeowners to refinance mortgages included misrepresenting and failing to disclose loan terms, charging excessive loan origination fees, and inflating appraisals to qualify borrowers for loans.

“As homeowners throughout the state and the country grapple with the fallout from subprime mortgages we must do all we can to soften the blow," said Governor Spitzer. "The Ameriquest settlement demonstrates why strong state enforcement to combat predatory lending practices is crucial to protecting consumers. The financial relief provided through this settlement will help borrowers defray the price of these costly loans." “Through their aggressive use of deceptive and predatory lending practices, Ameriquest both exploited borrowers and contributed to today's staggering crisis in the mortgage industry,” said Attorney General Cuomo. “These funds will help undo the damage that Ameriquest caused to thousands of New Yorkers.”

The agreement, which was announced in January 2006, required Ameriquest to pay the states $295 million for restitution divided into two separate funds: a $175 million fund to be distributed under a nationwide formula to most consumers who received an Ameriquest loan between January 1, 1999 and April 1, 2003; and a $120 million fund to be divided among the states based on the volume of Ameriquest loans made in each state, to be distributed, at each state’s discretion, to consumers who received an Ameriquest loan between January 1, 1999 and December 31, 2005.

Approximately 63 percent of the 21,709 eligible New York consumers participated in the restitution. Eligibility was based on specific, objective information and data contained in the consumer’s loan files and payment history, which would indicate that the borrower was likely subjected to Ameriquest’s predatory and illegal practices and suffered harm as a result.

The actual restitution amount each consumer will receive depends on the number of eligible New York consumers who decided to participate in the settlement. Nationwide, 64.23 percent of eligible consumers participated in the distribution of funds.

New York State Superintendent of Banking Richard Neiman said: “The subprime crisis continues to be a major issue for New York and a priority for the Banking Department. Collaborative efforts, such as this one between regulatory bodies and state Attorneys General, will continue to be critical in successful enforcement actions against activities that contributed to this crisis and activities that have emerged as a result of the crisis."

Checks were mailed to participating consumers on Thursday, Dec. 13th and Friday, Dec. 14th. Distribution of checks may take up to one week, so participating consumers should have received their checks before today

The New York Attorney General’s office, along with Attorneys General from Iowa, California, Illinois, and Washington, and the New York Banking Department led the multistate investigation of Ameriquest. As a member of the multistate’s Executive and Negotiating Committees, the New York Attorney General’s office developed a nationwide disbursement formula for one of the two distinct restitution funds, and also took the lead in creating a model for the second, state discretionary restitution formula. That model was accepted by members of the multistate’s Executive Committee, and adopted by most states.