|Leading subprime lender Ameriquest Mortgage Co. has agreed to pay up to $50 million to settle a class action suit that accused the California-based company of, among other things, charging excessive fees.
In settling the suit filed in San Mateo County Superior Court, Ameriquest agreed to pay $15 million to $50 million to borrowers in four states -- Alabama, Alaska, California and Texas.
"We are pleased the court approved this settlement agreement because it's fair and allows Ameriquest to focus its attention on making credit available to millions of Americans," Ameriquest said in a prepared statement e-mailed to MortgageDaily.com.
But the company, which was accused of misleading borrowers, admitted no wrong doing in agreeing to the settlement.
"The settlement cannot be used to show or even imply that Ameriquest violated any law or regulation," the company said. "The court approved the agreement, which both recognizes the implementation of best practices and the strong defenses to the allegations.
"Ameriquest's lending practices far exceed federal, state and local regulation," the company said. "Ameriquest's goal is to ensure each customer is fully informed of all loan terms."
The lawsuit was filed five years ago and originally included borrowers in 33 states, according to a filing Ameriquest made with the Securities and Exchange Commission earlier this year.
The number was reduced to four following a ruling by the California Court of Appeals in August of 2003. Cases in other states are being pursued by private borrowers and regulators.
Ameriquest said in the SEC filing it was accused by customers of inflating fees, failing to deliver on promised interest rates and other terms of mortgage loans and not being truthful in all documents.
The company said many of the claims are more than a decade old and that changes have been made to address any concerns.
"The settlement pertains to nearly ten year old issues and Ameriquest instituted many years ago lending best practices and computer systems to better protect customers," the company said.
"These best practices include seven days to review and rescind a loan at no cost as well as pricing systems that prevent arbitrary rate increases and full side by side comparison of loan terms," Ameriquest said. "Beginning in early July, Ameriquest will make available to all applicants Internet access to their current loan terms."
Nearly 20,000 claims were included as part of the class action, according to court documents.
Ameriquest still faces similar charges in a federal lawsuit filed by borrowers in northern California.
Plaintiffs in that suit, filed in U.S. District Court in San Francisco, objected to the terms of the settlement in the California case, court documents show.