Ameriquest, which makes home loans to borrowers with poor credit, said Monday it agreed to pay $325 million to settle an investigation into lending practices in 48 states.
The investigation found that salespeople at Ameriquest had concealed interest-rate and loan costs during the loan process, pressured appraisers to inflate the values of borrowers’ homes, and engaged in other high-pressure tactics to close deals, a statement from New York Attorney General Eliot Spitzer’s office said.
Ameriquest said it regretted occasions when its sales associates had not properly served customers.
Subprime lending, or lending to borrowers with damaged credit, has faced increased regulatory scrutiny in the last three to five years as the government has tried to prevent lenders from preying on borrowers.
The subprime lending industry mushroomed since the early 1990s, allowing many borrowers to get loans that would not have been possible 20 years ago, but also creating more opportunities for abusive lending practices.
As part of the settlement with attorneys general and banking regulators, Ameriquest agreed to overhaul its sales, appraisal and closing practices.
Of the $325 million, $295 million will go toward restitution for injured customers and $30 million to states involved in the investigation.