A Chink in Bad Credit Mortgage Lender Armor; Borrowers to be Released from Loans?

A Rhode Island lawyer claims he has found a chink in the legal armor of bad credit mortgage loan giant Ameriquest, one that could give hundreds of thousands of owners grounds to wriggle out of their loans. Christopher Lefebvre said he is representing 200 current and former Ameriquest homeowners in Massachusetts and other states - many now facing foreclosure - who are suing to undo mortgages taken out through the California-based home loan lender.

While Ameriquest, like many other subprime lenders, has faced charges from homeowners who contend they were duped into taking out big home mortgages they couldn’t afford, Lefebvre is taking a different approach.

The owners he is representing contend they were either not given all the correct mortgage paperwork, or that it was provided in a confusing or misleading way. Federal and Massachusetts housing market laws spell out, in minute detail, various disclosure documents mortgage companies are required to give borrowers.

Lefebrve contends paperwork problems were common during the recent hectic boom in subprime mortgages.

People got sloppy,” he said.

About half of Lefebvre’s Ameriquest cases involve the company’s policy of giving homeowners a seven-day period in which to cancel their loan. That document was provided alongside a federal notice informing the would-be borrower of a three-day cancellation period.

The two different mortgage company documents created confusion among borrowers, with the terms seeming to clash, Lefebvre said. In some cases, the Ameriquest notice did not spell out the start and end dates of the seven-day period, he said.

However, Ameriquest, in a statement, blasted the charges as “without merit” and called the seven-day cancellation policy a “pro consumer policy.”

Ameriquest adopted a week-long cancellation period after input by consumer advocates and review by state regulators, including those in Massachusetts, the company said.