For the second time in three years, the state Department of Banking asserted last week that some Connecticut branches of Ameriquest Mortgage Co. and its subsidiary Town & Country have imposed prepaid finance charges that exceeded the amount allowed by Connecticut law.
The department issued a notice of intent to send a cease-and-desist order to the company, requiring Ameriquest to stop overcharging customers with prepaid finance charges on loans. It also issued a notice of intent to impose a civil penalty and refused to renew some of the company’s licenses.
A spokeswoman for Ameriquest said the company does not comment on legal matters.
According to the Department of Banking, Ameriquest and Town & Country refinanced about 50 first mortgage loans for Connecticut customers from Aug. 1, 2003, to Aug. 1, 2004, and imposed prepaid finance charges that, when combined with the prepaid finance charges imposed on previous financings by Ameriquest or one of its affiliates within two years of the current refinancing, was greater than the 5 percent of the principal amount or $2,000 allowed by Connecticut law.
During that time, Ameriquest entered into a settlement agreement with the department for previous, similar violations. The Jan. 22, 2004, document said that Ameriquest and some of its subsidiaries imposed prepaid finance charges on more than 100 mortgage loans that exceeded what was allowed. The company agreed to refund the total amount of prepaid finance charges that exceeded the law to those customers, which totaled about $600,000. The companies also agreed to pay an additional $500 to each of the 124 Connecticut customers who were affected and a civil penalty of $5,000.
The Department of Banking did not honor requests for an interview, but responded in an e-mail that it does not comment on “the rationale used in arriving at settlement agreements with licensees and others.”
The department, in an e-mail sent by spokesman James Heckman, also refused to say which branches – Ameriquest lists five in Connecticut and Town & Country lists three – originated the loans, nor how they found out about the alleged violations.
‘Excessive’ Charges
The Department of Banking sent Ameriquest a letter on Dec. 3, 2004, giving the company an opportunity to “show compliance with all lawful requirements for retention of its first and secondary mortgage lender/broker licenses in Connecticut,” according to the department’s notice of intent. Ameriquest responded, but “the commissioner was not persuaded that Ameriquest showed any such compliance.” The department sent a similar letter to Town & Country, but had not received a response before issuing the notice.
The alleged violations are a basis for the cease-and-desist order and for the commissioner to refuse to renew Ameriquest’s first mortgage lender/broker and secondary mortgage lender/broker licenses in Connecticut, according to the notice. The company holds 11 first mortgage lender/broker licenses and eight secondary mortgage lender/broker licenses in Connecticut, according to the department’s Web site.
“Ameriquest’s imposition of excessive prepaid finance charges … illustrates that the financial responsibility, character, reputation, integrity and general fitness of Ameriquest are not such as to warrant belief that its business will be operated soundly and efficiently,” according to the notice from the Department of Banking.
“The commissioner intends to refuse to renew Ameriquest’s first mortgage lender/broker and secondary mortgage lender/broker licenses in Connecticut,” according to the notice.
The commissioner also intends to impose a civil penalty on Ameriquest that could add up to $100,000 per incident, or $5.3 million. Town & Country’s licenses face a similar fate, and the company possibly could be charged with a civil penalty of up to $200,000.
The commissioner denied the applications for secondary mortgage lender/broker from three of Ameriquest’s branches earlier this month. Branches in Houston, Stamford and Middlebury were affected, according to a notice from the Department of Banking.
The department did not say when Ameriquest’s other licenses are up for renewal.
“On Jan. 12, 2005, the commissioner denied the applications for new secondary mortgage lender/broker licenses filed by Ameriquest Mortgage Co. for three locations that were already licensed to engage in the business of making first mortgage loans,” according to the e-mail from Heckman. “What the denial means is that these locations will not be allowed to make secondary mortgage loans, but may continue to make first mortgage loans.”
Ameriquest now has the opportunity to request a hearing, according to Heckman’s e-mail. The company responded to the notice with a request for the department to meet with Ameriquest’s legal counsel.
