Settlement Not Enough?

By Alan Mallach

In the second largest settlement ever involving an alleged predatory lender, Ameriquest agreed to a $325 million settlement in January after a two-year investigation led by the California attorney general. The company, a subsidiary of the largest sub-prime lender in the United States, regularly failed to disclose prepayment penalties, inflated appraisals and misrepresented buyers’ credit ratings. Most of the settlement money will go to customers in 49 states who bought homes using Ameriquest. Critics say the deal isn’t good enough for customers who were victimized. They point out that in New York state, the average customer will receive $1,000, which won’t make up for the damage done. The largest settlement with a predatory lender was the $484 million settlement involving Household Finance Corporation in 2002. (City Limits, 1/30)

Alan Mallach, senior fellow of the National Housing Institute, is the author of many works on housing and planning, including Bringing Buildings Back and Building a Better Urban Future: New Directions for Housing Policies in Weak Market Cities. He served as director of housing and economic development for Trenton, N.J. from 1990 to 1999. He is also a fellow at the Center for Community Progress and the Brookings Institution.

Published by the National Housing Institute