Ameriquest pays N.Y. borrowers

Ameriquest Mortgage Co., once the biggest home-mortgage lender to people with credit problems, paid New Yorkers more than $18 million as part of a previously disclosed nationwide settlement of a predatory lending case.

Proceeds from the settlement with the Irvine-based company were sent to about 13,700 New Yorkers, Gov. Eliot Spitzer and Atty. Gen. Andrew Cuomo said Monday.

“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,” Cuomo said. “These funds will help undo the damage that Ameriquest caused to thousands of New Yorkers.”

Executives at Ameriquest agreed in January 2006 to pay $325 million to settle claims that it cheated customers by misrepresenting loan terms and getting inflated appraisals.

The settlement with 49 states includes $295 million to repay as many as 725,000 borrowers and $30 million to pay for investigations by state officials. The company also agreed to change its sales practices.

Of the $295 million going to customers, $175 million is earmarked for borrowers who obtained mortgages from 1999 to April 2003.

Payments, which will be at least $600 a customer, will be based on a formula set by the states and be distributed through a claims process, according to the agreement.

An additional $120 million will compensate customers who obtained mortgages between 1999 and 2005.

About 63% of the 21,709 New York consumers eligible to receive payments under the settlement agreed to participate, according to the statement issued by Spitzer’s and Cuomo’s offices.