Ameriquest Mortgage
Encyclopedia
Ameriquest was one of the United States
' leading wholesale lenders, and the largest sub-prime lender in the nation until all but four of its top-performing retail offices were closed in September of 2007. Its loan origination practices were at the heart of the Financial crisis of 2007–2010. Ameriquest originated the stated income loan
, which allowed potential borrower(s) to state his/her/their income without any process of verification. Many of these stated income loans were the catalyst to the ultimate failure of Ameriquest itself, and a key factor in the 2008 housing bubble crisis.
Ameriquest was founded in 1979, in Orange County, California
, as a savings and loan association
, or thrift, called Long Beach Savings & Loan. It was founded by Roland Arnall
. The bank moved to Orange County in 1991 and was converted to a pure mortgage lender in 1994, and renamed Long Beach Mortgage Co. In 1997, part of the business that funded loans made by independent brokers was spun off as a publicly traded company. This spin-off, which was originally founded as a subsidiary corporation under the name Ameriquest Mortgage, was now renamed "Long Beach Mortgage". The retail part of the business was renamed Ameriquest Capital, and remained private, solely owned by Roland Arnall. (In 1999, Washington Mutual
purchased Long Beach Mortgage.) Ameriquest Mortgage was a private company held by ACC Capital Holdings, which was owned by Roland Arnall. At the time the company stopped originating loans in September of 2007, Long Beach Savings & Loan had ultimately become the conglomerate of ACC Capital Holdings. ACC Capital Holdings was divided into three parts: Ameriquest Mortgage Company, the retail division; Argent Mortgage, the wholesale division; and AMC Mortgage Services, which was Ameriquest's failed attempt to become a company that could service other loans besides its own.
On August 31, 2008, Citigroup
completed its acquisition of its wholesale origination-lending unit, Argent Mortgage, and its loan-servicing unit, AMC Mortgage Services, and shut down its retail-lending unit, Ameriquest Mortgage.
Ameriquest was among the first mortgage companies to use computer
s to search for prospective borrowers and to speed up the loan process.
Ameriquest was widely known in the United States. It advertised widely on television
, had blimp
s that flew over football
and baseball
stadiums, and sponsored the Rolling Stones (2005 U.S. tour), and NASCAR
drivers. Its ad slogan
is "proud sponsor of the American dream," and their company motto was to "do the right thing." Additionally, in their commercials, Ameriquest also reiterated more than once that their customers are "more than a number." This is, of course, in reference to potential borrowers who may have had poor credit but were able to find financing with Ameriquest.
The home stadium of the Texas Rangers
was called Ameriquest Field until March 19, 2007, when in an undisclosed agreement between the two entities, Ameriquest relinquished the naming rights, and the stadium was renamed to the "Rangers Ballpark in Arlington".
Subprime lenders made $587 billion in new mortgages in 2004, up from $390 billion in 2003, according to National Mortgage News
. Ameriquest's share of that is estimated at over $50 billion..
On August 31, 2008, ACC Capital Holdings announced that it was closing Ameriquest by no longer taking loans and selling its loan-servicing unit to Citigroup
.
and predatory lending
practices against older, female, and minority borrowers. Prosecutors accused it of allowing mortgage brokers and its employees to charge these customers an additional fee of as much as 12% of the loan amount. As part of the settlement, Ameriquest (then still known as Long Beach Mortgage) agreed to use the educational fund to train its employees in proper mortgage techniques (training which most observers agree never actually occurred to any substantial degree), and to refrain from utilizing predatory lending techniques (such as "bicycling"), but only within the State of California. Shortly after entering into this settlement agreement, the company "switched" names with its subsidiary and began aggressively seeking refinance-mortgage business throughout the United States.
In 2001, after being investigated by the Federal Trade Commission
, the company settled a dispute with ACORN
, a national organization of community groups, promising to offer $360 million in low-cost loans.
In February 2005, reporters Michael Hudson (reporter)
and Scott Reckard broke a story in the Los Angeles Times about “boiler room” sales tactics at Ameriquest. Their investigation found evidence that the lender had in various questionable practices, including “deceiving borrowers about the terms of their loans, forging documents, falsifying appraisals and fabricating borrowers' income to qualify them for loans they couldn't afford.”
On 1 August 2005, Ameriquest announced that it would set aside $325 million to settle attorney-general investigations in 30 states to settle allegations that it had preyed on borrowers with hidden fees and balloon payments. In at least five of those states—California
, Connecticut
, Georgia
, Massachusetts
, and Florida
—Ameriquest had already settled multimillion-dollar suits. Brian Montgomery, the Federal Housing Administration
commissioner said that the Ameriquest settlement reinforced his concern that the industry was exploiting borrowers, and that he "was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans".
In May 2006, Ameriquest Mortgage announced it was closing all of its retail offices and in the future would make its loans through mortgage brokers, a channel that is not covered by the predatory-lending settlement with the Attorneys General.
On June 13, 2007, lawyers for borrowers, who are seeking to combine 20 suits into one class-action suit, asserted in a filing in Illinois Northern District Court that "Assets of the Ameriquest entities were transferred to (the owner of Ameriquest) Arnall with the actual intent to hinder, delay, or defraud the plaintiffs in this action."
The issues confronted by companies like Ameriquest could be a major contributing factor to the rapid rise of Certified Mortgage Planners, certified industry experts that work in concert with Certified Financial Planners in harmonizing the home-finance products utilized by consumers with their larger financial portfolios.
Former employees from Ameriquest, which was United States's leading wholesale lender, described a system in which they were pushed to falsify documents on bad mortgages and then sell them to Wall Street banks eager to make fast profits. There is growing evidence that such mortgage fraud
may be at the heart of the Financial crisis of 2007–2010.
Busch Series
season, the fund was promoted on race cars, whose designs were picked in a contest.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
' leading wholesale lenders, and the largest sub-prime lender in the nation until all but four of its top-performing retail offices were closed in September of 2007. Its loan origination practices were at the heart of the Financial crisis of 2007–2010. Ameriquest originated the stated income loan
Stated income loan
A stated income loan is a mortgage where the lender does not verify the borrower's income by looking at their pay stubs, W-2 forms, income tax returns, or other records. Instead, borrowers are simply asked to state their income, and taken at their word. These loans are sometimes called liar loans...
, which allowed potential borrower(s) to state his/her/their income without any process of verification. Many of these stated income loans were the catalyst to the ultimate failure of Ameriquest itself, and a key factor in the 2008 housing bubble crisis.
Ameriquest was founded in 1979, in Orange County, California
Orange County, California
Orange County is a county in the U.S. state of California. Its county seat is Santa Ana. As of the 2010 census, its population was 3,010,232, up from 2,846,293 at the 2000 census, making it the third most populous county in California, behind Los Angeles County and San Diego County...
, as a savings and loan association
Savings and loan association
A savings and loan association , also known as a thrift, is a financial institution that specializes in accepting savings deposits and making mortgage and other loans...
, or thrift, called Long Beach Savings & Loan. It was founded by Roland Arnall
Roland Arnall
Roland E. Arnall was a French-born American businessman and diplomat. As the owner of ACC Capital Holdings, he became a billionaire with Ameriquest Mortgage...
. The bank moved to Orange County in 1991 and was converted to a pure mortgage lender in 1994, and renamed Long Beach Mortgage Co. In 1997, part of the business that funded loans made by independent brokers was spun off as a publicly traded company. This spin-off, which was originally founded as a subsidiary corporation under the name Ameriquest Mortgage, was now renamed "Long Beach Mortgage". The retail part of the business was renamed Ameriquest Capital, and remained private, solely owned by Roland Arnall. (In 1999, Washington Mutual
Washington Mutual
Washington Mutual, Inc. , abbreviated to WaMu, was a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association until its collapse in 2008....
purchased Long Beach Mortgage.) Ameriquest Mortgage was a private company held by ACC Capital Holdings, which was owned by Roland Arnall. At the time the company stopped originating loans in September of 2007, Long Beach Savings & Loan had ultimately become the conglomerate of ACC Capital Holdings. ACC Capital Holdings was divided into three parts: Ameriquest Mortgage Company, the retail division; Argent Mortgage, the wholesale division; and AMC Mortgage Services, which was Ameriquest's failed attempt to become a company that could service other loans besides its own.
On August 31, 2008, Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
completed its acquisition of its wholesale origination-lending unit, Argent Mortgage, and its loan-servicing unit, AMC Mortgage Services, and shut down its retail-lending unit, Ameriquest Mortgage.
Ameriquest was among the first mortgage companies to use computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
s to search for prospective borrowers and to speed up the loan process.
Ameriquest was widely known in the United States. It advertised widely on television
Television
Television is a telecommunication medium for transmitting and receiving moving images that can be monochrome or colored, with accompanying sound...
, had blimp
Blimp
A blimp, or non-rigid airship, is a floating airship without an internal supporting framework or keel. A non-rigid airship differs from a semi-rigid airship and a rigid airship in that it does not have any rigid structure, neither a complete framework nor a partial keel, to help the airbag...
s that flew over football
American football
American football is a sport played between two teams of eleven with the objective of scoring points by advancing the ball into the opposing team's end zone. Known in the United States simply as football, it may also be referred to informally as gridiron football. The ball can be advanced by...
and baseball
Baseball
Baseball is a bat-and-ball sport played between two teams of nine players each. The aim is to score runs by hitting a thrown ball with a bat and touching a series of four bases arranged at the corners of a ninety-foot diamond...
stadiums, and sponsored the Rolling Stones (2005 U.S. tour), and NASCAR
NASCAR
The National Association for Stock Car Auto Racing is a family-owned and -operated business venture that sanctions and governs multiple auto racing sports events. It was founded by Bill France Sr. in 1947–48. As of 2009, the CEO for the company is Brian France, grandson of the late Bill France Sr...
drivers. Its ad slogan
Slogan
A slogan is a memorable motto or phrase used in a political, commercial, religious and other context as a repetitive expression of an idea or purpose. The word slogan is derived from slogorn which was an Anglicisation of the Scottish Gaelic sluagh-ghairm . Slogans vary from the written and the...
is "proud sponsor of the American dream," and their company motto was to "do the right thing." Additionally, in their commercials, Ameriquest also reiterated more than once that their customers are "more than a number." This is, of course, in reference to potential borrowers who may have had poor credit but were able to find financing with Ameriquest.
The home stadium of the Texas Rangers
Texas Rangers (baseball)
The Texas Rangers are a professional baseball team in the Dallas-Fort Worth Metroplex, based in Arlington, Texas. The Rangers are a member of the Western Division of Major League Baseball's American League, and are the reigning A.L. Western Division and A.L. Champions. Since , the Rangers have...
was called Ameriquest Field until March 19, 2007, when in an undisclosed agreement between the two entities, Ameriquest relinquished the naming rights, and the stadium was renamed to the "Rangers Ballpark in Arlington".
Subprime lenders made $587 billion in new mortgages in 2004, up from $390 billion in 2003, according to National Mortgage News
National Mortgage News
National Mortgage News is a weekly newspaper covering the mortgage sector in the United States. Its editorial director is Mark Fogarty, and its publisher is Tim Murphy. National Mortgage News is owned by SourceMedia.-History:...
. Ameriquest's share of that is estimated at over $50 billion..
On August 31, 2008, ACC Capital Holdings announced that it was closing Ameriquest by no longer taking loans and selling its loan-servicing unit to Citigroup
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
.
Predatory Lending Allegation
In 1996, the company agreed to pay $3 million into an "educational fund" to settle a Justice Department lawsuit accusing it of gougingPrice gouging
Price gouging is a pejorative term referring to a situation in which a seller prices goods or commodities much higher than is considered reasonable or fair. In precise, legal usage, it is the name of a crime that applies in some of the United States during civil emergencies...
and predatory lending
Predatory lending
Predatory lending describes unfair, deceptive, or fraudulent practices of some lenders during the loan origination process. While there are no legal definitions in the United States for predatory lending, an audit report on predatory lending from the office of inspector general of the FDIC broadly...
practices against older, female, and minority borrowers. Prosecutors accused it of allowing mortgage brokers and its employees to charge these customers an additional fee of as much as 12% of the loan amount. As part of the settlement, Ameriquest (then still known as Long Beach Mortgage) agreed to use the educational fund to train its employees in proper mortgage techniques (training which most observers agree never actually occurred to any substantial degree), and to refrain from utilizing predatory lending techniques (such as "bicycling"), but only within the State of California. Shortly after entering into this settlement agreement, the company "switched" names with its subsidiary and began aggressively seeking refinance-mortgage business throughout the United States.
In 2001, after being investigated by the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
, the company settled a dispute with ACORN
Acorn
The acorn, or oak nut, is the nut of the oaks and their close relatives . It usually contains a single seed , enclosed in a tough, leathery shell, and borne in a cup-shaped cupule. Acorns vary from 1–6 cm long and 0.8–4 cm broad...
, a national organization of community groups, promising to offer $360 million in low-cost loans.
In February 2005, reporters Michael Hudson (reporter)
Michael Hudson (reporter)
Michael Hudson is an American investigative reporter and author. Hudson currently writes about business and finance for the Center for Public Integrity, a nonprofit journalism organization...
and Scott Reckard broke a story in the Los Angeles Times about “boiler room” sales tactics at Ameriquest. Their investigation found evidence that the lender had in various questionable practices, including “deceiving borrowers about the terms of their loans, forging documents, falsifying appraisals and fabricating borrowers' income to qualify them for loans they couldn't afford.”
On 1 August 2005, Ameriquest announced that it would set aside $325 million to settle attorney-general investigations in 30 states to settle allegations that it had preyed on borrowers with hidden fees and balloon payments. In at least five of those states—California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
, Connecticut
Connecticut
Connecticut is a state in the New England region of the northeastern United States. It is bordered by Rhode Island to the east, Massachusetts to the north, and the state of New York to the west and the south .Connecticut is named for the Connecticut River, the major U.S. river that approximately...
, Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, Massachusetts
Massachusetts
The Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
, and Florida
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...
—Ameriquest had already settled multimillion-dollar suits. Brian Montgomery, the Federal Housing Administration
Federal Housing Administration
The Federal Housing Administration is a United States government agency created as part of the National Housing Act of 1934. It insured loans made by banks and other private lenders for home building and home buying...
commissioner said that the Ameriquest settlement reinforced his concern that the industry was exploiting borrowers, and that he "was shocked to find those customers had been lured away by the “fool’s gold” of subprime loans".
In May 2006, Ameriquest Mortgage announced it was closing all of its retail offices and in the future would make its loans through mortgage brokers, a channel that is not covered by the predatory-lending settlement with the Attorneys General.
On June 13, 2007, lawyers for borrowers, who are seeking to combine 20 suits into one class-action suit, asserted in a filing in Illinois Northern District Court that "Assets of the Ameriquest entities were transferred to (the owner of Ameriquest) Arnall with the actual intent to hinder, delay, or defraud the plaintiffs in this action."
The issues confronted by companies like Ameriquest could be a major contributing factor to the rapid rise of Certified Mortgage Planners, certified industry experts that work in concert with Certified Financial Planners in harmonizing the home-finance products utilized by consumers with their larger financial portfolios.
Former employees from Ameriquest, which was United States's leading wholesale lender, described a system in which they were pushed to falsify documents on bad mortgages and then sell them to Wall Street banks eager to make fast profits. There is growing evidence that such mortgage fraud
Mortgage fraud
Mortgage fraud is crime in which the intent is to materially misrepresent or omit information on a mortgage loan application to obtain a loan or to obtain a larger loan than would have been obtained had the lender or borrower known the truth....
may be at the heart of the Financial crisis of 2007–2010.
Charity
Ameriquest operated the Soaring Dreams Fund, which gives money to initiatives that help children. During the 2006 NASCARNASCAR
The National Association for Stock Car Auto Racing is a family-owned and -operated business venture that sanctions and governs multiple auto racing sports events. It was founded by Bill France Sr. in 1947–48. As of 2009, the CEO for the company is Brian France, grandson of the late Bill France Sr...
Busch Series
Busch Series
The NASCAR Nationwide Series is a stock car racing series owned and operated by the National Association of Stock Car Auto Racing. It is promoted as NASCAR's "minor league" circuit, and is a proving ground for drivers who wish to step up to the organization's "big leagues"; the Sprint Cup circuit...
season, the fund was promoted on race cars, whose designs were picked in a contest.
External links
- Ameriquest $325 settlement press release with links to agreement and fact sheet
- Meet the biggest predatory lender in Cleveland — America's new ambassador to the Netherlands., Cleveland Scene magazine.
- Forbes Magazine top 400 entry for Roland Arnall
- Workers Say Lender Ran 'Boiler Rooms' , Los Angeles Times, February 4, 2005
- Attorneys general comment on their investigation of Ameriquest
- SECInfo.com Ameriquest SEC filings
- NPR: Former Ameriquest Workers Tell of Deception
- http://www.latimes.com/business/la-fi-ameriquest1sep01,1,4514100.story?coll=la-headlines-business&track=crosspromo