California Injury Blog

Ameriquest mortgage company is paying out more than $18 million to 13,686 New Yorkers in restitution for indulging in predatory loan practices, a news article in the North Country Gazette reported. The company, like many others around the country, reportedly enticed homeowners to refinance mortgages by misrepresenting and/or failing to disclose loan terms, charging excessive loan origination fees and inflating appraisals to qualify borrowers for loans.

This restitution is part of a $325 million settlement Ameriquest opted for. According to another article, the actual amount of restitution each New York resident will receive depends on the number of eligible New Yorkers who participated in the settlement, which was first announced in January 2006. Residents will be eligible to receive money based on their individual loan, payment history and evidence that the consumer was subjected to illegal and predatory practices.

The settlement came as a result of state governments taking the initiative to hold Ameriquest accountable for their predatory lending practices and dashing the hopes of hundreds of thousands who were in pursuit of the American Dream. Hopefully, the money from the settlement will help these borrowers somewhat defray the price of costly loans they were duped into financing.

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The term “predatory lending” is used to describe a variety of fraudulent lending practices. In other words, these unethical lenders try to shove a mortgage down your throat that you cannot afford and usually succeed at doing it. They give you misinformation, lure you with false promises and use all sorts of sales tactics not considering for a minute whether the borrower has the income, assets or the ability to make the scheduled payments.

So what can victims of such fraudulent lending schemes do to right this wrong? Can they be rescued from a mortgage that threatens to put them on the path to foreclosure and financial ruin? The answer is – yes, it is possible. The legal remedies available to victims of predatory lending depend quite a bit on what kind of documented evidence the defrauded homebuyer has in his or her hands. These loans also include high fees piled on top of the mortgage, which makes it worse.

The best legal remedy for such a borrower is to seek what is known as “rescission” of the bad loan. What does this mean? Basically, that the bad loan will be erased and replaced with a loan that the buyer can afford. Not only that, but the principal owed will be drastically reduced because the fraudulent lender will be asked to pay a portion of the interest and the unjustified fees plus attorney’s fees.

The key to obtain this legal remedy is to prove that the lender did not comply with the federal Truth in Lending Act law, better known as TILA. To read more about this issue, click here.