LIANE HANSEN, host:
Customers who claimed they were ripped off by the home mortgage company Ameriquest are getting settlement offers in the mail. Some of them lost their homes after they couldn't afford Ameriquest's loan payments. The company settled predatory lending investigations with state prosecutors last year for $300 million. That money has been divided up and nearly half a million people soon will find out how much they will receive.
NPR's Chris Arnold reports.
CHRIS ARNOLD: There are a lot of Ameriquest customers around the country who say the company charged them predatory fees and lied to them about what their payments would be.
Mr. LUCAS BARBER(ph) (Client, Ameriquest): They were dishonest. They were unprofessional.
ARNOLD: Lucas Barber says Ameriquest told him his loan payments on his $136,000 mortgage would be around $900 and wouldn't go up if he refinanced with Ameriquest within two years. When he did that, Ameriquest charged him fees. He also took more cash out of his house to pay off a car and some Visa bills. Meanwhile, the interest rate on his loan did go up. So he says his payment rose to $1,300 a month.
Do you know how much they charged you in fees and stuff?
Mr. BARBER: Man, it was like $13,000, $14,000, $15,000. Man, it was - they were hitting me with fees.
ARNOLD: Actually, it was more. Barber's loan document showed that Ameriquest charged him a total of more than $19,000 in fees on three different loans between 2003 and 2006. Barber says that helped to make the size of his loan larger than the value of his house.
In 2005, Barber says his wife got into a bad car accident and he left his job as a corrections officer to help care for the kids and find more flexible work. But Barber says he couldn't afford his payments and couldn't pull any more money out of the house and he lost it.
Mr. BARBER: Man, it's a heartbreaker because it's like - I mean, it's plain especially when you - my son at the time, he was six so - and my daughter was two and then just telling them like, okay, well, you know, you're going to have to make some new friends. You know what I'm saying? We're going to move somewhere else. And we don't have a stable place no more.
ARNOLD: Barber admits he made mistakes, but he also thinks Ameriquest took advantaged of him and overcharged him. This week, Barber got a letter with an offer for a settlement Ameriquest struck with attorneys general from 49 states who've been investigating the firm. They alleged that Ameriquest sales personnel engaged in deceptive and fraudulent practices such as falsifying documents, lying to customers and charging improper fees.
Ameriquest settled for $300 million without admitting wrongdoing. That might sound like a lot of money, but there were about 500,000 allegedly affected Ameriquest customers. Barber found out this week, his share would be $700.
Mr. BARBER: Seven hundred dollars was just something I may not look at it. Right now, it's kind of tempting to take it.
ARNOLD: Barber says he could really use the money, but if he takes it, he gives up his right to future litigation. If he rejects the offer, he might get more from an ongoing class-action lawsuit. Jill Bowman is one of the co-lead attorneys in the nationwide class-action case.
Ms. JILL BOWMAN (Co-Lead Attorney, Class-Action Case versus Ameriquest): It absolutely has to be a personal decision that each borrower has to make based on their personal circumstances. But you've got to understand that these people are getting offers that, you know, hundreds of dollars to a thousand dollars when they've lost tens of thousands of dollars. And we're going to be pursuing, you know, billions of dollars.
ARNOLD: But even if the plaintiffs win in the class-action case, the awards still might not be bigger than the one on the table right now. Tom Miller is the attorney general of Iowa. He was the lead government lawyer in the Ameriquest case. He says Ameriquest customers who lost an unusually large amount of money might consider other legal options. But as to the class-action case, he says the lawyers there…
Attorney General TOM MILLER (Department of Justice, Iowa): They have a daunting challenge. This is the second largest recovery in the history of the country of this type. And to try and improve upon that is a difficult challenge to them. I wish them well.
ARNOLD: But some borrowers say they're willing to risk that and some feel like Ameriquest took their house from them. They want to reject the $700 or $900 offer on principle even if the ongoing litigation is uncertain. Others want to just take the cash and move on. Ameriquest for its part still denies any widespread lending abuses. The company said in a statement that the cash offers are an important final step in the settlement with the government.
Chris Arnold, NPR News.
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