Three cheers for Deval Patrick for doing the right thing on Ameriquest. If you’re on his mailing list you’ve probably already seen this, but just in case, here is Patrick’s just-released statement on the Ameriquest settlement and his role in it:
I also want to let you know about an important issue. A few days ago, Ameriquest Mortgage Company and the attorneys general of 49 states announced a settlement of serious unfair lending claims. I had a central role in getting this result.
The settlement is very good news for consumers throughout the country. In the words of Tom Miller of Iowa , the lead Attorney General on the negotiating team, “This is a landmark agreement that will change Ameriquest’s practices, and it will set standards we expect other mortgage lenders to follow.” Massachusetts Banking Commissioner Steven L. Antonakes declared that the settlement “will result in even greater protections for consumers.”
That’s true. The agreement raises the bar for lending practices across the industry. That is a very good thing, because sub-prime lending is the fastest growing sector of the lending market. They lend to the people the big banks won’t touch.
I am proud to have been a part of the solution. I joined the board of ACC Capital Holdings, the parent company of Ameriquest, in mid-2004, after the attorneys general investigations were already underway. I was asked to join largely because of those investigations.
I am no newcomer to fair lending enforcement. My involvement in these issues goes back to leading the charge against predatory lending in Massachusetts more than a decade ago on behalf of elderly Black borrowers. In the Justice Department I led the most far-reaching fair lending enforcement program in American history. In fact, when I was there we took on the predecessor company of Ameriquest itself. I know what rigorous oversight and enlightened practices can do to put the dream of homeownership within reach of more people.
I brought that experience and commitment to the Board of ACC Capital Holdings. I serve as the Board’s point person for the company’s ongoing efforts to improve its oversight and internal controls. I was briefed by the negotiating team regularly, and helped guide the company to an effective and practical result. This week’s settlement makes Ameriquest — and the entire industry — better.
Sometimes, to solve a problem, you have to be willing to get your hands dirty, to get into how and why a problem arises as a path to getting to the best solution. I was taught that getting involved is a more effective way to fix a problem than standing on the sidelines. When you choose me as Governor, you ought to know you are getting a leader who is ready to roll up his sleeves.
This is exactly the kind of statement I’ve been hoping Patrick would issue. He tells us why he joined the board of Ameriquest’s parent company. He tells us why it’s a good thing that sub-prime lenders exist, as long as they play fair. He tells us about his long, honorable history of working to ensure that all Americans have the dream of home ownership within their reach. And he tells us why he’s proud of what he accomplished in this matter. Good for him.
I think that this statement is excellent! It addresses all the concerns someone may have including the why. He admits joining with full knowledge of the situation Ameriquest was in but doing so because he had the expertise to lend a hand. I am very impressed.
Both Deval Patrick and Tom Reilly have some work to do on the Ameriquest issue. They both need to step out and endorse a bill filed by Senator Barrios and Representative St. Fleur that would create community reinvestment type responsibilities here in Massachusetts for mortgage companies like Ameriquest. Settlements like the one announced this week are okay, but they won’t change behavior unless state law catches up with who is doing the bulk of the mortgage lending these days. The Homeownership Investment Act would clean up this type of “despicable” behavior (Reilly’s word).
Can you tell us more about this Barrios/St. Fleur legislation? What would it do, how would it work?
Sure.
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The âHomeownership Investment Actâ (S#562/H#3011) would require licensed mortgage lenders making more than 50 loans per year in Massachusetts to responsibly meet the housing credit needs of low to moderate income residents and neighborhoods. Current state law covers banks and credit unions for community reinvestment but not mortgage companies. Mortgage companies would be examined by state regulators every few years and given a public rating based on how well they were serving low and moderate income communities in Massachusetts. Most importantly, it would give elected officials and community groups a seat at the table when trying to negotiate better lending practices with mortgage companies. Eight of the top ten subprime lenders (including Ameriquest) in Massachusetts would be covered by this bill.
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A similar bill passed the Senate in 2002 on a 38-0 roll call vote. It has never come up for a vote in the House. Mayors Menino and Cohen, the Massachusetts Bankers Association, and the Massachusetts Community and Banking Council support the bill. The Boston Globe, New Bedford Standard-Times, and the Dorchester Reporter have endorsed the bill. The chief non-profit sponsor of the bill is the Massachusetts Affordable Housing Alliance.
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If this bill were in effect, 120 lenders would be covered, including lenders such as H&R Block, GMAC, Countrywide, Ameriquest, and Household Finance. These lenders accounted for approximately 40% of all mortgage lending in Massachusetts in 2004.
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Massachusetts is one of the few states in the country that has community reinvestment-type laws for banks, credit unions, and insurance companies. With some leadership from Tom Reilly and Deval Patrick, we could again lead the way on this issue.
what big banks have to do under federal law. There must be a certain amount going back to the community or some amount of high risk loans a bank has to take on.
Maybe I’m missing something but Patrick still hasn’t answered everyone’s questions. In fact he avoids the most important ones in his email. Ameriquest pays him with the same money that they now admit they made by ripping people off. This is just a typical politician who is just trying to take undeserved credit for something. I think Woodlief from the Herald got it right and everyone should read this article.
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Ameriquest case lends AG credibility
By Wayne Woodlief
Boston Herald Columnist
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Thursday, January 26, 2006
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The way Tom Reilly and Deval Patrick have handled the predatory lending lawsuit case against Ameriquest Mortgage Co. shows the contrasting styles the Democratic rivals for governor would bring to the Corner Office.
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p> Attorney General Reilly is a passionate moralist, quick to righteously go after the black hats with all his might. Take it from Iowa Attorney General Tom Miller, the lead lawyer in the $325 million national settlement that includes $12 million for Massachusetts homeowners gulled into bigger loans and huge fees.
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p> âHis great strength is when something is wrong, he recognizes it and wants to right the wrong,â Miller said. Indeed, Reilly and New York Attorney General Elliot Spitzer balked when Ameriquest tried to stand firm on a $285 million settlement. A Reilly aide said, âAmeriquest [reps] were on the red eyeâ to the East Coast that night to jack it up another $40 million in meetings with Reilly and Spitzer.
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p> âThis is a bad company, a bad company,â Reilly said this week â a good week for the AG as he triumphantly kicked off his gubernatorial campaign with a roots-style rally in his Springfield hometown, and a hard jab at Patrick as I interviewed him by phone.
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p> I asked if Patrick should resign from Ameriquestâs board and Reilly replied, âThatâs his decision. But this company cheated a lot of middle-class people out of their most precious possession â the equity in their homes. Itâs not a company whose payroll Iâd be on.â
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p> But Patrick â who tilted against predatory lending as head of the Justice Departmentâs civil rights section under President Clinton â said heâs not about to resign. Especially now, since âthe real issue is the implementation of the very good agreement.â
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p> âI was appointed as a member of the board because of this case, by the guy [former board chairman Roland Arnall] that Iâd investigated in an earlier suit. When I was in the Justice Department we developed the most far-reaching fair-lending enforcement program ever . . . Roland wanted me to help make this case a platform for change.â
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p> Patrick is smooth, as familiar with boardrooms as Reilly is with courtrooms. Like Reilly, he had a hard-scrabble upbringing. But unlike the AG, he doesnât pound on those doors of privilege so much as pry them open.
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p> Patrick said Reillyâs labeling of Ameriquest was âjust political hyperbole. In fact, these institutions lend to people the downtown banks wouldnât touch.â His approach: âSometimes you have to get your hands dirty, get into something, understand how it works and why a problem arises. Thatâs what leaders ought to do. Not sit on the sidelines and criticize.â
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p> Does he mean Reilly is hot-dogging it from the sidelines?
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p> âYes,â Patrick answered.
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p> Well Reilly may hot-dog occasionally. But not on this one. Reilly and the other AGs also insisted on an independent monitor to oversee Ameriquestâs enforcement of its standards in the future â the same âfirst-class standardsâ that Patrick said heâll work for as a board member.
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p> That would be an ideal way for him to earn his salary on the board. He would not reveal what he is paid but when pressed to put it in financial disclosure form terms said, âItâs over $100,000.â How much over, he didnât say.
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p> The Reilly and Patrick styles also contrast on the main issue that divides them: The proposed state income tax rollback to a flat 5 percent. For Reilly, itâs a simple moral question: âWe have to honor the voice of the people.â Patrick says heâs for a rollback â but not just yet. Meanwhile, he vows to work from the inside with the Massachusetts Municipal Association to help create more local option taxes.
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p> Hey, with Reilly banging on all these doors and Patrick working for more gradual relief, Iâm getting a bit confused. Just which of them is the insider and which the outsider?
“Ameriquest pays him with the same money that they now admit they made by ripping people off.”
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Um, what other sort of money would they be paying him? It has to come from their parent company in order for him to be working for the board (and it’s still not clear as I recall if or how much he’s paid anyway).
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Patrick says he joined AFTER the lawsuit, because he wanted to make a case for change…what exactly are you objecting to here?
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And you really should figure out a way to make your “copy and paste” seperate from your commentary…like using “####” before and after. And a link would be nice too.
that it was over $100,000. Not chump change. He ought to donate all of the Ameriquest money to some housing-related worthy cause – that would defuse that part of the issue once and for all.
What kind of answer is “over $100,000”? Apparently Ameriquest is not a public company (at least I could not find it) so we may never know.
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If Patrick does reach the mantle of viablity, he does have to clear up the quesions about his personal wealth. Does he currently have a $2 million dollar contract with Coke (which may have a non disclosure preventing him or Coke to confirm it) Does he have 22 million stock options from Texaco? Does he have the kind of money in which he can match the emerging field. (In January of ’05, I heard him tell a crowd that he does not and the stock option #, first reported in the Washington Post, was flat out wrong).