ACC Capital Holdings Corp., the parent company of Ameriquest Mortgage Co., announced Thursday afternoon that it has recorded a $325 million provision in its financial statements in connection with discussions that could cap its exposure in any settlement with regulators and attorneys general from 30 states.
The company said that it "believes it is in a position to quantify its financial exposure in this matter," and that the provision is "based on extensive discussions with the states and represents the company's best estimate of its maximum financial liability for a comprehensive resolution of this matter."
Nonetheless, ACC Capital said that it has not reached "a definitive final agreement," and that "there can be no assurance such an agreement will be reached."
The company said it is "focused on resolving the issues under discussion with these agencies so as to reach a resolution that is fair to customers and fair to the company."
American Banker first reported March 14 that the fast-growing Orange, Calif., subprime lender was in discussions with regulators and attorneys general in 25 states that could lead to changes in its retail lending practices or customer refunds.
A spokesman for Ameriquest said the talks with state officials had been going on for about a year. The talks were revealed in a bond filing in mid-2004, which said the states had raised concerns about things like Ameriquest's stated-income loans, the accuracy of its appraisals, and its verbal statements to borrowers.
Iowa Attorney General Tom Miller, who is leading the multistate task force, confirmed in a press release Thursday that "a number of states are in discussions with Ameriquest regarding their lending practices" and that "no final agreement has been reached."
Mr. Miller said that he was aware of ACC Capital's announcement, and that "the states do not disagree" with the move to set aside the $325 million.
