After months of negotiation, subprime giant Ameriquest Mortgage has agreed to pay $325 million to settle claims with 49 states that the company engaged in abusive lending practices.On Monday Ameriquest's parent company, ACC Capital Holdings of Orange, Calif., promised to change some of its business practices, but without acknowledging any wrongdoing. The settlement covers every state but Virginia because, as one company spokesman put it, "Ameriquest doesn't lend in that state." (Its wholesale affiliate, Argent Mortgage, is not a party to the settlement.) Roughly $295 million of the money will be used to compensate borrowers who feel they were wronged by Ameriquest, with the balance going to repay the states for their legal costs. Attorney Kelly Dermody, who represents Ameriquest borrowers, said the size of the settlement "reflects the enormous scope of wrongdoing underlying Ameriquest's lending practices." Borrowers who lodged complaints against the company and its other retail brands must now decide whether to accept the settlement money or pursue claims through civil court. According to the Quarterly Data Report, Ameriquest and Argent funded about $70 billion in subprime loans combined last year, ranking first among all players in that niche. The privately held ACC took a $325 million hit to earnings last year to cover the settlement. The lender disclosed in a public filing that state attorneys general were concerned about these issues: the "appropriateness" of discount points charged prior to February 2003; the accuracy of appraisal valuations; stated income loans; "oral" statements made to borrowers regarding loan terms; and its policies on funding Native American reservation properties.

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