In the wake of the federal government’s investigation of the mortgage lending industry, the Ameriquest and Argent Forced-Flood Coverage lawsuit has been filed. The companies made loans to Latinos and African Americans. Yet, the Settlement with federal regulators ignores the Court’s judicial oversight. Here’s how the settlement affects your right to fair and affordable flood coverage.
Ameriquest mortgages made loans to African Americans
The recent collapse of Ameriquest mortgages has highlighted the widespread denial of credit to African Americans. These loans were often made with high-interest rates, pushing many borrowers into foreclosure or repossession. Such practices have stripped black and Latino communities of assets and widened economic and social disparities. Consequently, the changes to the mortgage market may only make things worse. For example, African Americans and Latinos were disproportionately affected by the crisis.
Despite this evidence, many borrowers still have no idea of the extent of the damage done to their credit rating. While African Americans are more likely to default on their loans than non-Hispanic whites, they were less likely to be confined to them. In 2004, for example, Ameriquest mortgages made 381 loans to African Americans in the Detroit MSA. Likewise, Argent Mortgages, which is owned by Ameriquest, made 2142 loans that were over the rate spread.
As the mortgage industry continues to grapple with the impact of these practices, lawsuits have emerged to address these issues. In the recent Baltimore v. Wells Fargo case, a lawsuit alleged that Wells Fargo had a special unit of African American bank employees that marketed subprime loans to African Americans. While there are no conclusive numbers, data from the 1990s and early 2000s indicate widespread discrimination in the industry. In 2006, for example, a Wall Street Journal analysis reported that nearly 60% of subprime borrowers were black.
Argent mortgages made loans to Latinos
In 2006, Argent Mortgages purchased Ameriquest, which claimed to be a “proud sponsor of the American dream.” Founded by billionaire Roland Arnall, who was Bush’s ambassador to the Netherlands, Ameriquest stopped making loans in 2007. In 2006, it sold its assets to Citigroup for $325 million. However, the lawsuits continue. Some Latinos have lost their homes to foreclosure because of these loans.
The ACC has been accused of predatory lending practices. The settlement with ACC is an attempt by the company to correct its practices. The bank was a part of the settlement, but the ACC has not yet passed any legislation to fix its problems. Consumer protection advocates and class action lawyers are questioning the timing of this settlement. Argent’s layoffs may be linked to the ACC’s decision to nominate Roland Arnall as ambassador to the Netherlands.
The settlement with federal regulators ignores judicial oversight
While the business press largely overlooked the loopholes in the settlement, the Los Angeles Times reported that the new US ambassador to the Netherlands, Roland Arnall, applauded the agreement, which only covers Ameriquest, Town & Country, and the former Bedford AMC, but not its largest subprime lending unit, the controversial Argent. The company is a serial settler, and its history of abusive practices and predatory lending makes the settlement an even bigger mess.
Although the ACC had previously purported to reform its practices, its settlement with Ameriquest and Argent ignored judicial oversight. Other attorneys general are similarly intent on declaring the company ready for business without any binding reforms. In a statement released Thursday, California AG’s spokesman said the settlement would provide additional consumer protections for homeowners and businesses.
The borrowers’ claims against Ameriquest are based on the sale of their loans. They had little or no assets to recover from the losses. The settlement was negotiated in conjunction with the California deputy attorney general. The borrowers may opt out of the settlement by sending a claim form by Feb. 22. Failure to submit the claim form by March 9 forfeits their rights to seek compensation.
