Court blocks release of loan documents

SEATTLE – The Washington Supreme Court on Thursday blocked the attorney general’s office from releasing certain financial information related to the investigation of a mortgage company, in a case that balanced federal privacy laws with the state Public Records Act.

A lawyer who handles predatory lending cases filed a Public Records Act request for documents related to the investigation into the lending practices of Ameriquest Mortgage Co. Attorney General Rob McKenna was prepared to release certain information – including customer names, addresses, phone numbers and interest rates – that Ameriquest provided during the investigation.

The attorney general’s office argued that much of the information was already available in the public record, and thus fell within an exception in the privacy laws, which might otherwise prevent its release.

But the high court unanimously ruled that the exception applies only to financial institutions – not third parties that receive the information, such as the attorney general’s office. The court said the only information that can be released is that which does not identify a consumer – such as a data showing what interest rates were paid by certain income groups.

Furthermore, it said, the attorney general’s office may not release the documents with the personal information redacted. Under federal rules, the attorney general can “disclose and use” protected information only in the course of normal duties connected to the investigation – and disclosing the information under the Public Records Act is not a normal part of an investigation, the court said.

Deputy Solicitor General Alan D. Copsey, who handled the case for the attorney general’s office, said the ruling was important in that it clarified that the federal laws could work in concert with the state Public Records Act, rather than pre-empt it.

Where federal and state law conflict, federal law can take precedence under the Supremacy Clause of the U.S. Constitution. But the state Supreme Court said there was no real conflict in the case: The Public Records Act has an exception which says disclosure is not required when prohibited by other laws.

“It clarifies for us how federal law works with the state Public Records Act – that’s the biggest thing,” Copsey said.

Ameriquest agreed to pay $325 million in 2006 to settle complaints from states. The states accused the company of fraud by pressuring consumers into loans that trapped them in debt and put them at risk of losing their homes.

Nearly $10 million of that went to 8,750 Washington residents.