In 1996, the company agreed to pay $3 million into an "educational fund" to settle a
Justice Department lawsuit accusing it of
gouging and
predatory lending practices against older, female, and minority borrowers. Prosecutors accused it of allowing mortgage brokers and its own employees to charge these customers an additional fee of as much as 12 percent of the loan amount. As part of the
settlement, Ameriquest agreed to use the educational fund to train its employees in proper mortgage techniques and to refrain from utilizing predatory lending techniques, but only within the State of
California. 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 at least five of those states—
California,
Connecticut,
Georgia,
Massachusetts, and
Florida—Ameriquest had already settled multimillion-dollar suits.
Federal Housing Administration commissioner
Brian Montgomery stated that the 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". Former Ameriquest employees alleged that they were pushed to falsify documents on bad mortgages and then sell them to
Wall Street banks looking to make fast profits. There is growing evidence that such
mortgage fraud may have been at the heart of the
2008 financial crisis. ==See also==