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Inner City Press
Report - January 23, 2006
Predatory Lending
Settlement Leaves Out Ameriquest’s Largest Lender, Argent, Critics Say
Jan. 23 – Earlier today,
the largest subprime mortgage lending conglomerate in the United States,
ACC Capital Holdings Corporation, announced a $325 million predatory
lending settlement with the attorneys general of more than 40 states.
Almost immediately, questions were raised as to why the settlement does
not cover ACC’s subsidiary which made the most high-cost loans in 2004,
Argent Mortgage.
The
settlement comes at a convenient time for ACC and its founder, Roland
Arnall. In two weeks, the company plans a major multi-million dollar
advertising campaign connected to the National Football League’s Super
Bowl XV in Detroit. Arnall has been nominated to become the United
States ambassador to the Netherlands. He has seen his confirmation
stalled for months due to the pending settlement. But given the
perceived loopholes in the settlement, critics question whether Arnall’s
nomination should be forward in the U.S. Senate.
In 2004, the
most recent year for which Home Mortgage Disclosure Act data is
available, ACC’s Ameriquest Mortgage made 185,833 loans, while its
Argent Mortgage unit made 215,403 loans, more than half of them over the
federal regulators’ high cost definition, of three percent over
comparable Treasury securities on a first lien, and over five percent on
a subordinate lien.
Studies of the
data have shown that ACC and Argent direct a much higher percent of
their high cost loans to African Americans and Latinos than is true of
other, prime-priced lenders.
Inner City
Press in mid-2005 submitted Freedom of Information Act requests to many
states’ attorneys general, for copies of consumer complaints against ACC
and Argent. ACC’s legal department opposed the release of any
information, resulting in ongoing litigation, including in Texas.
ACC and its
predecessors have previously purported to reform their practices, as far
back as 1996 with the Department of Justice and Office of Thrift
Supervision (when the company was named Long Beach Mortgage), in 2000
with the Federal Trade Commission, and since. Among those questioning
the settlement are class action lawyers, by means of a press release.
Consumer protection advocates, however, emphasize the need for binding
reforms at ACC including Argent, and not only monetary settlement for
past loans. This is a developing story.
The
settlement has also given rise to
questions about the due diligence performed by the investment banks
which have helped package Ameriquest’s loans and sell them as
mortgage-backed securities, including the three largest banks in the
United States: Citigroup, JP Morgan Chase and Bank of America. Each of
these three banks has securitized Ameriquest loans, while claiming to
screen out predatory loans. With today’s settlements, questions are
being raised about these banks previous defenses of their practices.
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Some previous
highlights and special reports:
Citigroup
Dissembles at United Nations Environmental Conference
The United
Nations' Year of Microcredit: Questions & No Answers
Other Inner City Press
reports are archived on
www.InnerCityPress.org - if you have
trouble finding previous articles, please
contact us
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