Class action suit in Baltimore Circuit Court targets Ameriquest

Daily Record and the Kansas City Daily News-Press, Aug 31, 2006 by Daniel Ostrovsky

(This article was originally published in The Daily Record, Baltimore, another Dolan Media publication.)

Ameriquest Mortgage Co., which earlier this year settled claims of deceptive lending practices in 49 states, faces a new set of legal problems with a class action lawsuit filed last week in Baltimore Circuit Court.

According to the complaint, Ameriquest instructed its affiliated title settlement companies to charge borrowers an illegal notary fee and engaged in a scheme to receive kickbacks on that fee.

The real estate settlement statements given to borrowers at closing identified a $250 fee payable to Baltimore-based JM Closing Services as a notary fee, the suit alleges.

JM Closing was "formed solely to facilitate illegal payments and kickbacks to Ameriquest" and in most cases "did not actually provide any notary services to Ameriquest mortgage clients who paid for such services," the complaint says.

The suit was filed by Phillip Robinson of Baltimore-based Civil Justice and the law firm of Quinn, Gordon & Wolf.

"This is a new type of fee that we haven't seen before in Maryland," Robinson said Friday.

"Maryland's statute allows notary fees to be $3 per notarization and $2 for each subsequent one," he said. "Typically in a mortgage transaction you may have three or four or five notarizations."

JM Closing owner Jonathan Means, who is listed as a defendant in the suit, said his company had not done a closing for Ameriquest since April.

"I don't know anything about that," Means said about the alleged kickback scheme. "It's certainly not true."

The lawsuit alleges that Means used his personal relationships with Maryland-based managers of Ameriquest to become the preferred notary provider in the state for the lending company.

Ameriquest instructed its affiliated title settlement companies, upon closing, to include the $250 notary fee payable to JM Closing, the suit alleges.

JM Closing does not have its own employees or manage its own business, the suit alleges.

The suit accuses the defendants of violating the Real Estate Settlement Procedures Act and the Maryland Consumer Protection Act.

Baltimore resident Barbara A. Becker is named as a representative of the class, which, according to Robinson, potentially includes hundreds of borrowers.

In an effort to refinance the first mortgage on her home, Becker allegedly closed on an $112,000 loan from Ameriquest in August 2005 and was charged the $250 notary fee payable to JM Closings.

The closing on Becker's mortgage loan was allegedly conducted by Beaver, Pa.-based First Merit Settlement Services, which is not named as a defendant in the suit.

A call to the Orange, Calif., headquarters of Ameriquest was not returned.

Ameriquest is the nation's largest subprime lender and offers high-interest loans to people who cannot obtain a loan from mainstream lenders.

In January, Ameriquest and its holding company, ACC Capital Holdings Corp. entered a $325 million settlement with 49 states over allegations of predatory lending practices.

Ameriquest admitted no wrongdoing as part of the settlement but agreed to change some of its business practices and let an outside firm monitor its compliance with the agreement for five years.

"Ameriquest has a history of being involved in deceptive practices, and I believe there is some effort to try to clean up those practices," Robinson said, "but I don't believe that there is an entirely clean house yet."