Commissioner Announces Settlement
Between State of Connecticut and Ameriquest Mortgage Company

State of Connecticut Banking Commissioner John P. Burke announced today that the Department of Banking and Ameriquest Mortgage Company and its affiliates entered into a Settlement Agreement concerning violations made by Ameriquest of certain sections of the Connecticut General Statutes.

Ameriquest's imposition of prepaid finance charges in connection with the internal refinancing of first mortgage loans which were less than two years old and exceeded the greater of five percent of the principal amount of the initial loan or $2000 combined with the Companies' failure to register loan originators became the basis for this agreement.

After months of negotiations, the Department of Banking and Ameriquest have agreed to the following settlement conditions:

• $1,000,000 Civil Monetary Penalty
• Creation of a Connecticut Housing Assistance Fund: $1,000,000 initial seed money, then Ameriquest will pay 5 equal annual installments of $1,000,000 beginning on June 1, 2006 and ending on June 1, 2010
• Various restrictions dealing with possible future violations by Ameriquest
• All customers affected by Ameriquest's actions were reimbursed excess fees and received $500 as additional compensation.

Attached is information with additional details of the settlement.

"This settlement provides a number of benefits to the citizens of Connecticut," commented Commissioner Burke. "We were able to take a negative situation, this company's violations, and make it into a positive one. The Connecticut Housing Assistance Fund will concentrate on our cities and help some of our most needy citizens purchase homes. This initiative is presently being developed by the Department and The Connecticut Housing Finance Authority with details of the program to be announced at a later date."

"I am very proud of the Department of Banking's role in crafting this settlement," concluded Commissioner Burke. "Our mission is to protect Connecticut consumers from any wrongdoing by the entities we regulate. This agreement is a reflection of the hard work and dedication to duty by the Department of Banking employees. The settlement with Ameriquest both supports Connecticut residents and is also fair to the company."

"We worked closely and cooperatively with the Connecticut Department of Banking to resolve their concerns. We are pleased to have reached a fair resolution and will continue to serve our customers in Connecticut and to help residents of the state achieve their homeownership dreams and meet their financial goals," said Adam Bass, Senior Executive Vice President of ACC Capital Holdings, the parent company of Ameriquest.

Settlement Agreement Highlights

Apparent Violations

• Failure to register loan originators as required by section 36a-486(b) and section 36a-511(b) of the Connecticut General Statutes.
• Imposition of prepaid finance charges in connection with the internal refinancing of first mortgage loans which were less than two years old and exceeded the greater of five percent of the principal amount of the initial loan or $2000 in violation of Section 36a-498a of the Connecticut General Statutes.
  

Ameriquest Fines and Fees

• $1,000,000 Civil Monetary Penalty
• Creation of Connecticut Housing Assistance Fund - $1,000,000 initial seed money to be held in escrow until fund administrator is established. Company to pay 5 equal annual installments of $1,000,000 beginning on June 1, 2006 and concluding on June 1, 2010 in addition to the initial $1,000,000 seed money.
• $250,000 Reimbursement for Departmental Costs
  
  

Terms of the Agreement

Auditor

• Retention of independent, third-party auditor to be selected and paid for by the Companies and approved by the Commissioner.
• Auditor to conduct 4 semi-annual reviews of the Companies' compliance with Connecticut General Statutes relating to the charges on internal refinances within 2 years and the registration of loan originators.
• Auditor to provide written report to the Division.
• The audits may continue after the fourth audit if the Commissioner is not satisfied with the Companies' compliance.
  

In the Event of Future Violations

• Future violations of Section 36a-498a (statutes related to prepaid finance charges).
• If a violation is discovered by the Companies, the responsible company shall refund any excess prepaid finance charge, with interest, to the borrower, notify the Division of such refund, and pay an administrative fine of $1,000 per loan to the Department.
• If the Companies accomplish the above requirements, the violation will be "cured" and not counted towards the 25 violation threshold. If not, the violations will be counted towards the 25 violation threshold.

If violations are discovered by the auditor or the Department

• If there are under 25 violations, the responsible company shall refund any excess prepaid finance charge, with interest, to the borrower, provide written notification of such refund, and pay the Department an administrative fine of $5,000 per loan.
• If there are more than 25 violations during an audit period the administrative fine shall increase to $10,000 per loan, and the Commissioner may take enforcement action without an administrative hearing.
  

Future violations of Section 36a-486(b) and Section 36a-511(b) (Statutes related to loan originator registration)

• If a violation is discovered by the Companies, the responsible company shall pay to the Department any registration fees and a $5,000 administrative fine for each unregistered originator.
• If the Companies accomplish the above requirements, the violation will be "cured" and not counted towards the 25 violation threshold.
  

If violations are discovered by the auditor or the Department

• Responsible company shall pay any registration fees and an administrative fine of $10,000 for each unregistered originator. Notwithstanding such payment, these violations count in the 25 violation threshold.
• If there are more than 25 violations during an audit period, in addition to the above stated requirements, the Commissioner may take enforcement action without an administrative hearing.

Commissioner's Enforcement Authority

If the Companies, or any one of them, exceed the violation thresholds, the Commissioner may, in his sole discretion, without an administrative hearing, suspend, revoke, or refuse to renew each and all of the Companies licenses upon 10 days notice to the Companies, regardless of whether any individual company exceeded the threshold.

Additional Information:

Agreement to Establish Connecticut Housing Assistance Fund

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