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In re Ameriquest Mortgage Co.

December 2, 2008

IN RE: AMERIQUEST MORTGAGE CO. MORTGAGE LENDING PRACTICES LITIGATION
ROSA L. DAILEY, PLAINTIFF,
v.
CITI RESIDENTIAL LENDING, ET AL., DEFENDANTS.
YVONNE D. NIMOX, PLAINTIFF,
v.
AMERIQUEST MORTGAGE CO., ET AL. DEFENDANTS.



The opinion of the court was delivered by: Marvin E. Aspen, District Judge

MDL No. 1715

Centralized before the Honorable Marvin E. Aspen

MEMORANDUM OPINION AND ORDER

Plaintiff Rosa L. Dailey ("Dailey") filed a complaint against Defendant Citi Residential Lending ("Citi Residential"), a subsidiary of Citibank and Citigroup; Ameriquest Mortgage Company ("Ameriquest"); WM Specialty Mortgage ("WM Specialty"), a subsidiary of Washington Mutual; and Integrity First Mortgage ("Integrity"). Argent Mortgage Company ("Argent Mortgage") is the wholesale origination lending unit of Ameriquest. Her complaint alleges six causes of action surrounding a home-loan mortgage operation originated by Argent Mortgage Company and engaged in by other defendants.*fn1

Plaintiff Yvonne D. Nimox ("Nimox") filed a complaint against Defendant Ameriquest, as well as U.S. Bank, Wells Fargo Home Mortgage, Inc. ("ASC"), and Does 1-5. The complaint alleges seven causes of action to justify rescission of Nimox's mortgage.

Presently before us are two motions to dismiss for failure to state a claim filed by Defendants Citi Residential (Dailey Dkt. Nos. 23-24) and ASC (Nimox Dkt. Nos. 56-57). Both motions are similar in nature and we find it appropriate to resolve them together. Accordingly, and for the reasons set forth below, we deny both Defendants' motions to dismiss.

BACKGROUND

I. Dailey Complaint

In 2000, Dailey, along with her sister, Betty Jones ("Betty"), procured a $69,000 mortgage loan secured by a home that Dailey's mother and her late husband purchased in 1972 ("Dailey home"). (Dailey Compl. ¶ 13.) After the mortgage loan was approved, Dailey and Betty borrowed an additional $20,000, which would, coupled with the first loan, be used for home repairs and to pay property taxes. (Id. ¶ 14.) In early 2005, Betty received a telephone call from an agent at Integrity who persuaded her to refinance the loan with Argent Mortgage based on the promise that her annual percentage rate would be lowered from 12% to 6%. (Id. ¶ 24.) Integrity prepared a Uniform Residential Loan Application ("Application") that overstated the incomes of Dailey and Betty. (Id. ¶¶ 26-27.) The Application also represented the value of the Dailey home as $300,000; however, the Uniform Residential Appraisal Report -- submitted as part of the loan application -- concludes that the value of the Dailey home is $254,885, almost $50,000 less than the value contained in the loan application. (Id. ¶¶ 29-30.)

After Betty was admitted to Kindred Hospital for medical problems, an agent of Argent Mortgage drove Dailey from her home on the south side of Chicago to the hospital on August 8, 2005. (Id. ¶ 33.) After that agent promised the sisters a reduction in their monthly payments for refinancing their loans, Betty and Dailey signed the closing documents in Betty's hospital room. (Id.) At that time, Betty was medically ill and Dailey was suffering from an aortic aneurism and double vision; as a result, neither read, nor reviewed the documents each signed, and no one explained the contents therein. (Id. ¶¶ 32, 34.)

Though no one gave Betty or Dailey a Good Faith Estimate or Loan Brokerage Agreement prior to or at the closing of the loan, an agent from Argent Mortgage directed Dailey and Betty to sign the HUD-1 Settlement Statement. (Id. ¶¶ 35-36.) According to the Dailey Complaint, this statement contained charges of a Yield Spread Premium, a sum the lender (here, Argent Mortgage) pays to the mortgage broker (here, Integrity) for the mortgage broker's bringing to the lender gullible borrowers who could be induced to sign a high-cost, one-sided loan. (Id. ¶¶ 38-39.) The HUD-1 also contained fees that Dailey alleges are duplicative of the Yield Spread Premium and fees that did not yield corresponding service. (Id. ¶¶ 41-44.)

At some point, Argent Mortgage, the originator of the Dailey loan, assigned and sold the mortgage secured by the Dailey home to WM Specialty. (Id. ¶ 50.) On roughly August 31, 2007, Ameriquest sold its remaining mortgage-origination and servicing assets to Citigroup, Inc., parent of Citi Residential. (Id. ¶ 5.) As a result, Citi Residential is currently the servicer*fn2 of Dailey's mortgage. (Id. ¶ 6; Dailey Resp. at 2, 4; Citi Residential Reply at 1-4.)

In her complaint, Dailey alleges that Ameriquest has a practice of falsifying documents. (Id. ΒΆ 16.) Specifically, she alleges that Ameriquest engaged in fraud and falsification of loan documents by misstating loan terms, getting inflated appraisals, and using bait-and-switch schemes to cheat customers ...


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