Mortgage Lender Settles Lawsuit

"The terms of the loan were overwhelmingly not in the Hutchinsons' best interest," wrote D.C. Superior Court Judge Anna Blackburne-Rigsby in a recent ruling in the family's favor. The family is being represented by the Neighborhood Legal Services Program. Ameriquest has appealed the ruling.

State officials said that Roland E. Arnall, Ameriquest's founder and principal shareholder, a major White House campaign contributor who has been nominated to be U.S. ambassador to the Netherlands, had participated in the settlement talks. Several senators on the Senate Foreign Relations Committee had urged Arnall to resolve the dispute.

"He made himself available and apologized for misdeeds," said California Attorney General Bill Lockyer. "What happens with his ambassadorship nomination is up to the Senate and the White House."

Andy Fisher, a spokesman for Sen. Richard G. Lugar (R-Ind.), chairman of the Senate Foreign Relations Committee, who has aggressively pushed Arnall's nomination, said the nomination is "pending on the floor of the full Senate," and that there has been no change in status.

Consumer advocate Ira Rheingold questioned whether Ameriquest would abide by the business-practice changes it has pledged to make. "Ameriquest has been notorious a long time," he said. "It's important to see how aggressively it will be monitored."

In the news conference, prosecutors acknowledged that some Ameriquest borrowers would never truly be made whole. For example, those who had their credit ruined after they were lured into loans they could not afford have no legal recourse, they said.

"We applaud the attorneys general for taking action on behalf of American homeowners, but there are so many loans involved here that consumers are likely to receive restitution for only a small portion of their claims," said Boston lawyer Gary Klein, who is pursuing a class-action lawsuit against Ameriquest. There are more than a half-dozen other pending class-action cases in other courts, he said.

Under the agreement, Ameriquest loan officers will be required to tell borrowers such things as what a loan's interest rate will be, how much it could rise and whether the loan includes a prepayment penalty. Loan officers who do not make that disclosure will be subject to discipline. The company would also be forbidden from giving sales agents financial incentives for pushing consumers into higher-interest loans or prepayment penalties.