Iowa AG May Target Loan Officers

When the states agreed to a landmark $325 million legal settlement with subprime giant Ameriquest Mortgage, prosecutors did not single out individual loan officers but in the future they might. At a speech before the National Association of Mortgage Brokers on Tuesday, Iowa attorney general Tom Miller said the "next step" is to target "individual" loan officers engaged in lending abuses. Without offering specifics, he said "criminal cases" might be brought against LOs who are a party to appraisal fraud, and "up-selling" though he noted that up-selling may not necessarily be illegal. (Up-selling occurs when a loan officer is compensated extra money for bringing a mortgage in at a higher-than-market note rate or points.) Mr. Miller was the lead AG in the case against Ameriquest of Orange, Calif. In January the privately held mortgage company settled abusive lending allegations without admitting any guilt. Mr. Miller said he is also very concerned about appraisal fraud in the industry, and home builder-owned mortgage firms overcharging consumers. In response to a question about home builder/lenders, he said, "We're aware of it and we're looking at it."