Howard Jackson sits in the center of his East Side living room, his back to an ancient television. The Browns are losing to Indianapolis, and he can't bear to look.
With his slippers on the footrest of his wheelchair, the 67-year-old towers over everything in the room, including two plastic-lined pink sofas, on which he hasn't sat for a decade. "I broke my neck," he says. "On Christmas Day of '94, no less. I fell down those stairs over there and hit my head into the wall."
The accident left Jackson a quadriplegic, unable even to turn his head. He bounced from hospital to hospital for years. Doctors finally decided to move him to a nursing home. The Navy vet refused.
"I've been independent all my life," he says. "I made my mind up that I wasn't going to no nursing home, so I got a mortgage, and that's how I got into this trouble."
Jackson was living on a fixed income of $1,073 a month. Between nursing aides, medical equipment, and the gas bill, it didn't go far, but he managed.
Then, in 2002, he started getting calls from VP Equity, an independent mortgage broker in Stow. A company agent said that Jackson could save some cash by refinancing his house. It sounded good to Jackson, who's the first to admit that he knows as much about real estate as he does about haute couture.
After a breezy over-the-phone application process, VP Equity, which brokers loans for Ameriquest, offered Jackson a mortgage with the lender. What sold him was the low monthly payment of around $500.
For the first six months, Jackson benefited from his refinancing. He used the extra savings to pay off his few debts, including a $3 balance on a JC Penney card. He also built a modest downstairs bedroom with a wheelchair-accessible ramp to his backyard.
But by 2004, Jackson's sweet deal had grown sour. VP Equity failed to mention that his low monthly payments to Ameriquest were based on an adjustable interest rate, he claims. Worse, the deal allowed the rate to adjust up only. After two years, his interest had ballooned to 9.3 percent -- though conventional mortgages were selling at around 6 percent. His monthly payment jumped to over $700.
Jackson quickly fell behind. In August 2004, he received a letter from Ameriquest. The company was foreclosing on his house -- the home his parents had lived in for 48 years. "It's all I've got," he says as he blinks back tears.
Jackson scraped together extra cash, but it didn't help. By last December, his rate had crested again to 10.1 percent. His mortgage now consumed 90 percent of his income, leaving him less than $200 a month for all other expenses.
After weeks of being blitzed with threatening calls from Ameriquest, he finally asked a cousin for advice. She discovered that VP Equity had overstated Jackson's income by 25 percent, making him appear eligible for a loan he couldn't afford.
Ameriquest appeared to be tacking on unnecessary costs too. The company was charging Jackson for homeowner's insurance on top of the State Farm coverage he already had.
After unsuccessfully pleading with Ameriquest, the cousin contacted the East Side Organizing Project (ESOP), a community group which works on behalf of predatory-lending victims.
ESOP executive director Mark Seifert wasn't shocked by Jackson's story. His voice mail was already crammed with dozens of complaints from Ameriquest customers. And he wasn't the only one getting an earful.
"Ameriquest -- what I hear are horrors," says Cleveland Councilman Mike Polensek.
The company had earned its reputation quickly. In 2002, Ameriquest was barely on Cleveland's radar. A year later, it had become the most prolific sub-prime lender in the city. And by last year, it was already cashing in on many of those loans. It filed 679 foreclosures in 2004, according to ESOP's research of Cuyahoga County court filings.
It appeared that Ameriquest was merely bringing to Cleveland practices that have been pilloried nationwide.
Last year, the company's lending tactics prompted investigations by attorneys general in no fewer than 30 states. In at least five of those states -- California, Connecticut, Georgia, Massachusetts, and Florida -- Ameriquest has already settled multimillion-dollar suits.
In 2001, after being investigated by the Federal Trade Commission, the company settled a dispute with ACORN, a national organization of community groups, promising to offer $360 million in low-cost loans. Before that, it paid $4 million to the U.S. Justice Department, which charged Ameriquest with discriminating against seniors, minorities, and women.
So it seems only fitting that the company should find its way to Ohio. After taking huge campaign contributions from the banking industry, the legislature has done its best to block any form of consumer protection from predatory lenders. Former Attorney General Betty Montgomery even sued cities that enacted their own laws. All of which has made Ohio a scammer's paradise.
"Ohio has become fertile ground to predatory lenders," Seifert says. "The famous phrase goes, 'You've got more protection if you buy a toaster than if you take out a mortgage.'"
Cleveland now has the country's second-highest foreclosure rate, with Ameriquest leading the charge.
"They're mammoth," Seifert says. "And they've openly admitted that Cleveland is one of their biggest problems."
Even more problematic: The guy behind it all is one of President Bush's biggest fund-raisers -- a man about to become America's new ambassador to the Netherlands.
Most companies with Ameriquest's history would have been prosecuted out of business. But Roland Arnall operates from a special stratosphere of American commerce -- heights he paid handsomely to achieve.
In 1979, he launched Long Beach Mortgage in Orange County, California. Twenty-five years and a company name change later, he was ranked by Forbes as America's 106th-wealthiest billionaire.
Today, Ameriquest is ubiquitous. Its commercials flash across the television screen. Its blimps fly over stadiums. The home of President Bush's old baseball team, the Texas Rangers, is now called Ameriquest Field. The company is even sponsoring the Rolling Stones' U.S. tour.
But Arnall's biggest expenditures have been of the political variety.
He and his wife, Dawn, have been longtime political contributors, giving generously to both parties, but with keen favoritism for those already in power, according to Federal Election Commission records.
In the past three years, the couple has raised more than $12 million for Bush's political efforts, including $5 million for the Progress for America Voter Fund, a self-proclaimed "conservative issue advocacy organization dedicated to keeping the issue record straight."
Dawn also served as a co-chair for the 2004 Republican Convention and hosted a $1 million Bush-Cheney fund-raiser at the couple's 10-acre home in Holmby Hills, California. After Bush was reelected, the Arnalls forked over another $750,000 for his inaugural bash.
Their generosity has paid off. On August 1, Bush nominated Arnall to become the U.S. ambassador to the Netherlands. The same day, Ameriquest announced that it would set aside $325 million to settle investigations in 30 states.
Normally, politicians would scurry away from a man with such a sordid business history. But when you raise $12 million for the President, you've purchased special consideration.
Arnall's beneficence extends to state politicians as well. Since 2002, he's dumped more than $7 million on California legislators. Arnold Schwarzenegger received $1.5 million of that pie.
Arnall has no record of giving in Ohio. Then again, he doesn't really need one; Ohio politics have already been well nourished by those serving the mortgage industry.
From 2003 to 2004, the Ohio Association of Mortgage Brokers -- to which Ameriquest has made contributions -- and the Ohio Mortgage Bankers Association gave more than $104,000 to executive and legislative candidates. Almost 90 percent of that went to Republicans.
It's the sort of cash that buys legislation like House Bill 386, written by lenders and signed by Governor Taft in 2002.
A uniquely Ohio law, it mandates that only the state -- not cities or counties -- can regulate mortgage lending. Yet it provides no plan for how the state would actually do it. And that's just the way the mortgage industry wants it. Eight of the bill's sponsors were among the top 20 recipients of donations from the Ohio Association of Mortgage Brokers.
"The state is on the side of the banks, not the people," says Cleveland Councilman Kevin Conwell. "Predatory lending is one of my ward's biggest problems. It's a councilman's nightmare, and our hands are tied behind our back."
Cleveland passed its own predatory lending ordinance in April 2002. The American Financial Services Association, along with Attorney General Montgomery -- who also receives contributions from the Ohio Association of Mortgage Brokers -- promptly sued to have it thrown out.
The city is now before the Ohio Supreme Court. But the court's members get money from the mortgage lobby too.
In the meantime, Ameriquest is selling at least 1,625 Cleveland loans a year.
Carmen Molina's English wasn't perfect, but it was good enough to understand that Great Lakes National Mortgage Company was offering a refinancing package that would allow her to pay off bills.
But before she could refinance, Great Lakes' owner, Jerry Ponsky, said she'd have to make some repairs. Thinking she had no choice, Molina reluctantly signed a contract to have USA Builders Inc. waterproof her basement for $7,500.
Before the work was finished, Ponsky had already drawn up the papers for Molina's new mortgage with Argent, an Ameriquest sister company.
Perhaps because of its sullied name, perhaps because the parent company hopes to distance itself from its own lending practices, Ameriquest doesn't pop up frequently in Cleveland -- at least by name. Here, the company is more commonly known as Argent, which in turn sells loans through independent brokers.
By March of 2004, the spring rain had soaked through Molina's basement. She called Ponsky and complained about USA Builders' shoddy work. When Ponsky said he couldn't help her, Molina refused to release her final payment of $4,000. So Ponsky simply took it from her, she claimed in a subsequent suit.
It alleged that Ponsky forged Molina's signature on an arbitration agreement in order to have the final $4,000 released to USA Builders. Records also show that USA Builders and Great Lakes were both owned by Ponsky.
When all was said and done, he had taken more than $11,000 from Molina. All she had to show for it was a leaky basement.
Molina not only took Ponsky to court; she sued Argent as well.
Argent had misrepresented the terms of Molina's loan, her suit alleged. High-interest loans are subject to additional disclosure statements, which Argent had failed to provide. Argent also failed to disclose extra finance charges and misrepresented Molina's actual interest rate as 7.9 percent, though it was above 8 percent, she contended.
The suit was settled in September, according to Molina's attorney.
Though the deal precludes either party from talking, Ameriquest claims that it's tough on employees and vendors who aren't aboveboard. "We can say that we have a zero tolerance for fraud . . .," says Ameriquest spokesman Chris Orlando.
Even ESOP acknowledges that some of Argent's worst practices aren't necessarily the company's fault. "A lot of times, it's these bad brokers," Seifert says. "Their brokers screw them big-time by overstating incomes and overappraising property. But it's also Argent's fault for continuing to work with these guys."
Yet the tactics independents are using in Cleveland bear a striking resemblance to those practiced by Ameriquest in other states, where the company uses its own brokers.
In March, three Tampa borrowers sued Ameriquest, claiming that its agents had forged their names on falsified documents.
When Catherine Chaney finishes delivering food to patients at MetroHealth, the 44-year-old nursing aide grabs her Tupperware and heads to the waiting room for lunch.
It's her 15th straight day of work. She looks exhausted as her petite frame sinks into an armchair. But she doesn't touch her salad as she speaks of that day last year when she put her faith in Ameriquest.
Chaney was working almost 60 hours a week. It still wasn't enough to cover all the bills and her $900 mortgage payment.
Chaney thought that a lower payment would allow her to cut back on her hours, leaving her more time for her two kids. She knew that in the world of finance, ignorance is not bliss. So before she set out to find a lender, she took classes on borrowing.
After shopping around, she was confident that Argent had the best deal in town. The company could bring her payments down to $807.
She signed the papers in December 2004. But when she got the paperwork home, she realized she'd been ripped off. "I felt so stupid," Chaney says. "I was in my second round of [consumer] counseling classes. I couldn't believe I'd found myself in this predicament."
When Chaney read the fine print, she noticed that her monthly payments didn't cover taxes or insurance. After doing the math, Chaney discovered that she was actually paying more than before she refinanced. To make matters worse, her interest rate had gone up from 6.25 to 8.9.
She was the victim of "Trick #1" on the Ohio Office of Consumer Affairs' list of "Predatory Lending & Its Tricks" -- "Selling the Monthly Payment." And that wasn't all.
When Chaney first applied for her loan, she submitted her pay stubs as proof of her $1,600 monthly income. The broker could see that she wasn't earning enough to qualify. He asked her to sign a hand-written statement affirming that she earned almost twice as much. "The broker convinced Chaney to sign the statement, saying that they had to show Argent that her income would go up," says Seifert. "But really, he just overstated her income."
After she settled on Argent, Chaney had her house appraised by Third Federal. When comparing the numbers, she realized that Argent had overappraised her home by around $16,000. To the state, it's known as "Trick #5: Over-Inflating the Appraisal." In the sub-prime market, higher appraisals mean bigger fees for brokers and lenders.
Chaney asked her broker why Argent's appraisal was so much higher than Third Federal's, but she never got an answer. "It all just happened so fast," Chaney says. "They're slick. They talk real fast, saying 'Sign here, sign here.'"
Chaney now had to work even more overtime to cover her mortgage. She also started taking out high-interest payday loans from Ace Cash Express. "I've never had credit problems," she says. "Now I'm in credit counseling."
By February, she was late on a payment; Argent wouldn't accept her next check unless she paid her late balance in full. "If a lender accepts a partial payment on a delinquent account, they lose the right to foreclose," Seifert says.
"I started getting sick," Chaney says. "I was having these horrible migraines, having to go for MRIs, and no one knew what was causing them. I did. It was my mortgage."
Chaney tried to refinance with other lenders, but because her home had been overappraised, no one was interested. Noted one broker: "You know you've been the victim of predatory lending, right?"
Chaney also considered selling her house, but it wouldn't bring enough to cover her mortgage. "There are houses on my street that have been empty for over a year because of the same problem," she says.
Padded appraisals are just one of the reasons that more than 12,000 homes stand abandoned throughout Cleveland. "In some cases, we have homes that aren't worth more than $60,000, but the mortgage was marked up to $100,000," says Councilwoman Dona Brady. "No one can afford to buy them and put up the money to fix them, so the houses just sit there."
Only three months after lending her the money, Argent sent Chaney a foreclosure letter. By then, she'd heard horror stories about the company. "One woman said they showed up and put chains on her house," Chaney says.
Afraid of the same fate, Chaney had her children live with their baby-sitter on weekdays. "It was humiliating," she says. "It messed my life up big-time."
But before Chaney's home joined Cleveland's blight, ESOP stepped in to renegotiate her loan. "I felt so stupid, just so bad," she says. "But I didn't feel so bad after hearing all the other stories."
On a sunny September afternoon, Lewis Harris' daughter adds a coat of tangerine-tinted paint to their home's newly built addition. "I wanted a place for my grandkids to play in the winter," Harris says.
As the 68-year-old watches his grandson do homework at the kitchen table, his house of 16 years shows signs of renovation, from new siding and windows to glossy hunter-green walls in the living room.
In 2000, Harris figured that refinancing would be the best way to fix up his West Side ranch house. "For four years, it went fine," he says. "When I got sick, it all went to hell."
Last year, doctors discovered a tear in his aorta. He underwent two major heart surgeries, which left a jagged scar that stretches from navel to shoulder blade.
When he became unable to work at his trucking job of 46 years, Harris and his wife struggled to live on a fixed income. Veteran's Assistance gave him $586 a month to help with his mortgage, but it wasn't enough to cover the payment.
Veterans receiving mortgage assistance get packs of redeemable vouchers. They send them to the lender, which then obtains the money from the government. In Harris' case, either Ameriquest never sent in his vouchers, or the VA never redeemed them.
In May of 2004, Harris received a letter from Ameriquest, stating that the company hadn't been receiving his payments. He was threatened with foreclosure. Harris was shocked. "I've never missed a mortgage payment in my life," he says.
He had a stack of certified mail and VA voucher receipts to prove that he'd done his part. His Ameriquest statement from October 2004 confirmed that the company had received his payments. Yet Ameriquest nonetheless came after him with hefty late fees. Harris also received countless threatening calls. "They called 99 and a half times a day," he says. "And some of those Ameriquest people get nasty, and I mean nasty."
Ameriquest also wouldn't accept any more vouchers unless Harris paid off all his late charges at once. By 2005, the company was taking Harris to court to foreclose.
When Harris took his case to the Legal Aid Society, they turned him over to ESOP.
Seifert says that misplacing VA vouchers is common among sub-prime lenders. "It's as much of a problem with the Veteran's service office as it is with the lender," Seifert says. "But it still wasn't Harris' fault."
As ESOP fielded complaints, the organization invited Ameriquest Vice President James Anderson to meet with customers.
When Anderson wimped out after promising to attend a July meeting, the group unleashed its arsenal. "Our folks were calling Anderson's cell phone at 2 or 3 a.m.," Seifert says.
It was a classic ESOP tactic. Since the group is usually outgunned by a larger foe, it doesn't fight by Marquess of Queensberry rules. By hurling toy sharks at executives and protesting in shark costumes outside banks, the group has managed to strong-arm giants like Charter One, Fannie Mae, and Fairbanks Capital into seeing the errors of their ways.
"The kicker is, we're not against these guys making money. Make money!" says Seifert. "If you do it responsibly, you can do it at ESOP. We'll pay the rent. But when you're abusing people, that's when we're gonna fight."
Ameriquest seemed to understand that its new foe wouldn't be doing quiet battle, with polite lawyers in conference rooms. Anderson finally agreed to negotiate. "It's going well," Seifert says. "They're negotiating in good faith."
Indeed, the company has acquiesced. Ameriquest put Jackson at a fixed rate of 6.5 percent and lowered his monthly payment, reimbursing him for $1,900 he paid for unneeded insurance. The company is trying to locate Harris' missing funds and has finally acknowledged his hardship case. Ameriquest is also working out a deal with Chaney.
The FBI began investigating predatory-lending cases involving Argent, according to Dennis Ginty of the Ohio Department of Commerce. Yet Ohio has done nothing.
"We're doing the state's job," Seifert says. "What these lenders are doing is obviously illegal, but neither the attorney general nor the county prosecutor is making an example out of any of them.
"Ohio's politicians are bought and paid for by the banking industry," he says. "The banking lobby is incredibly strong. They've got bodies down at the state capital all day, every day, and they've got the money. And these redneck Republicans make it clear that they will be ruled by how much money they get."