Shark In The Water

Organized crime may not have much on some of these guys. Reuters (07.29.05):

"Ameriquest Mortgage Co., one of the biggest US subprime mortgage lenders, said yesterday it has set aside $325 million for a potential settlement of a probe into its lending practices by regulators in 30 states, including Massachusetts. The investigation concerns allegations that the Orange, Calif.-based company charged home buyers too many points on mortgages prior to February 2003, misrepresented loan terms, and conducted inaccurate appraisals." Ameriquest sets aside $325m for settlement

"Typically, subprime loans are for persons with blemished or limited credit histories. The loans carry a higher rate of interest than prime loans to compensate for increased credit risk." Back in 2002, subprime lenders "accounted for 9.4 percent of both conventional home purchase originations and conventional home refinance originations." For first-time home buyers, subprime lenders "accounted for one-fourth of the market in 2004, up dramatically from their single-digit shares in the previous decade. Their explosive growth partially has been the result of their willingness to say yes -- at a price -- to almost any applicant." In other words, it's a huge, very profitable market. Plus your customers almost never bitch because they're just happy as hell someone will loan them money. For those of you who've endured the countless Ditech ads on cable, the participants are aggressive marketers. Believe it or not, sometimes those in the business (Citigroup) yield to temptation, and cross that fine line into what the FTC calls "predatory lending". This is when "a mortgage company or broker pushes unjustifiably expensive refinance or home equity loans on homeowners. Typically, the purpose of these loans is to finance home improvements or to consolidate debts." Ameriquest has had a little trouble too, having "been dogged by consumer complaints and lawsuits accusing it of fraud and falsification of documents." AP (07.29.05):

"In March, the company agreed to pay $50 million to settle a class-action lawsuit alleging it cheated thousands of borrowers in Alabama, Alaska, California and Texas. The settlement, finalized in June, did not include an admission of liability." "In 1996, Ameriquest paid $4 million to settle charges by the Justice Department that its lending practices cheated minorities, women and the elderly." Ameriquest Sets Aside $325 Million for Potential Settlement

But hey. If you play your cards right, there is a definite upside. Washington Post (07.29.05):

"On the same day that the White House announced that President Bush is nominating California billionaire Roland E. Arnall to be ambassador to the Netherlands, the company he controls said it would set aside $325 million for a possible settlement of allegations of predatory lending tactics. Arnall's company, Ameriquest Mortgage Co., is being investigated by regulators in 30 states. A $325 million settlement would be one of the largest ever in a predatory lending case." Bush Picks Ameriquest Owner as Ambassador

"Arnall is the firm's principal shareholder. He, his wife and their companies have been the biggest political contributors to Bush since 2002." We're pretty sure one has nothing to do with the other. You wouldn't think it would, would you?