"Boiler Room" Claims Put Heat on Ameriquest

Slugging down Red Bull caffeine drinks, sales agents would work the phones hour after hour, he said, trying to turn cold calls into lucrative "sub-prime" mortgages--high-cost loans made to people with spotty credit.

The demands were relentless.

"It was like a boiler room," said Bomchill, 37. "You produce, you make a lot of money. Or you move on. There's no real compassion or understanding of the position they're putting their customers in."

Indeed, Bomchill--who said he left Ameriquest because he didn't like the way the company treated its employees and customers, and now works as a mortgage broker--contends that the drive to close deals and grab six-figure salaries led many Ameriquest employees astray: They forged documents, hyped customers' creditworthiness and "juiced" mortgages with hidden rates and fees.

Such claims are not unusual against sub-prime lenders, which are a frequent target of consumer groups.

Ameriquest, however, has been held up as an industry model since agreeing in 2000 to establish a fund for needy borrowers and to adhere to a list of "best practices." The company says it holds itself "to the highest standards" and does not tolerate unethical or improper behavior by its employees.

The United States' largest sub-prime mortgage lender, based in Orange, Calif., has sought to burnish its image as it moves into prime, or mainstream, mortgage lending. It has increased its political profile, Donating heavily to various campaigns. The privately held company, which may be mulling a public stock offering, committed $75 million to have the Texas Rangers' stadium dubbed Ameriquest Field. And on Sunday it should gain even more recognition when it sponsors the Super Bowl halftime show.

"At Ameriquest," the company likes to say, "we never forget that our customers deserve respect, fairness and honesty."

Yet a far different picture emerges from public records, interviews and dozens of consumer lawsuits:

Ameriquest customers filed more complaints with the Federal Trade Commission from 2000 through 2004 than did those of two of its biggest competitors combined, the agency said.

- Recent lawsuits filed by consumers in at least 21 states allege a pattern of fraud, falsification of documents, bait-and-switch sales tactics and other violations.

- In court documents and interviews, 32 former employees across the country claim they witnessed or participated in improper practices, mostly in 2003 and 2004. This behavior was said to have included deceiving borrowers about the terms of their loans, forging documents, falsifying appraisals and fabricating borrowers' income to qualify them for loans they couldn't afford.

- On Jan. 10, the Connecticut Department of Banking said it would seek to bar Ameriquest from doing business in the state for allegedly charging excessive fees and repeatedly violating a state law aimed at preventing loan flipping. Ameriquest is challenging the action.

Consumer activists say the company, a big-time Donor to Democrats and Republicans and the No. 1 contributor to the 2005 Presidential Inaugural Committee, has also been lobbying against state legislation aimed at countering alleged abuses by sub-prime lenders.

"They try to paint themselves as the good guys--that they've adopted best practices and they're kind of the gold standard for the industry," said Norma Garcia, a Maryland lobbyist for Consumers Union. "But really when you look at what they're doing to try to fight predatory lending legislation, it shows exactly where they're coming from."

Ameriquest executives declined requests for interviews, asking instead for a written list of questions. The company answered some of them in writing and also offered a general statement about its practices.

"Ameriquest has helped hundreds of thousands of homeowners purchase or refinance their homes, making it possible for them to achieve their financial goals and enhance their quality of life," the statement said. "We are proud of our role in helping increase homeownership to historic levels. We are a nationwide lender and our goal is to be an industry leader.

"Ameriquest pioneered innovative Best Practices in the mortgage industry," the statement continued. "We have procedures and internal controls in place that are designed to ensure that underwriting standards, pricing policies and property valuations are fair and accurate. We act promptly to resolve any issues that arise."

The company is headed by Chairman Roland E. Arnall, 65, a media-shy developer and financier.

In response to the barrage of lawsuits, the company has pointed to signed documents from customers saying they understood the terms of their loans. In a Maryland lawsuit seeking class-action status, for example, Ameriquest asserts that the plaintiffs "distorted the actual facts concerning the underlying transactions." The allegation that borrowers didn't receive proper disclosures, Ameriquest says, is "directly belied by the fact that each plaintiff acknowledged in writing that they had received such disclosures."

But the plaintiffs in those cases contend that loan salespeople used fast talk and sleight-of-hand paper shuffling to get them to sign documents without knowing the consequences.

Sara Landa said Ameriquest employees tricked her into signing a mortgage that required her to pay $2,494 a month, more than she earns cleaning houses. All the negotiations were in Spanish, according to Landa's lawsuit, but all the loan documents were in English--a language in which she's not proficient. "The only thing she ever got from Ameriquest that was in Spanish was a foreclosure notice," said her lawyer, Nathaniel McKitterick.

Landa and Ameriquest reached a confidential settlement in December. Ameriquest did not admit wrongdoing. The company said it goes to "great lengths to ensure customers are fully informed about loan terms so there are no surprises at the closing table."

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