On Monday lending giant Ameriquest and 49 states reached one of the largest consumer-protection settlements in history.

Ameriquest, which is the country's No. 1 provider of mortgage loans to people with bad or impaired credit, has admitted no wrongdoing but agreed to pay $325 million to a settlement fund.

Falsehoods and Fake Documents

Mary Overton's American dream was truly a gift, a four-story Brooklyn brownstone she bought from her landlord in 1983 for about $15,000.

"He told me I could pay $299.11 a month rent, and then in four years I had it paid for," Overton said.

But she remains in danger of losing her home because of an Ameriquest mortgage she took out last year to finance home repairs.

On paper Mary Overton looks like a strong applicant for a mortgage, even at age 74. Loan documents show she has a total monthly income of $4,600, tenants, a job and a retirement account with $54,000 in the bank. Except, she says, none of that was true when Ameriquest approved her for a $285,000 loan.

The mortgage required payments of almost $2,300 a month. Overton, a widow, said she and her grandson lived on government benefits of less than $800 per month. She said her mortgage document was a work of fiction created by her Ameriquest loan agent.

While Overton wanted a loan that could be financed with home equity, she claimed Ameriquest sold her an adjustable-rate mortgage starting at 8.99 percent, which could rise to 15 percent.

The company charged almost $23,000 in loan fees, then, she said, sent the balance of the mortgage to a contractor, without her approval.

Ameriquest told ABC News that the loan agent who handled Overton's mortgage was later fired.

Multi-State Problem

Connecticut Attorney General Richard Blumenthal said his state alone received 200 serious complaints against Ameriquest in the last two years.

"This is very similar part of the pattern that we saw in Connecticut -- inflated incomes, fabricated assets," Blumenthal said. "And as a result, many lost their homes."

The $325 million settlement forces the company's agent to follow strict rules of disclosure.

The settlement also puts in place a monitor to closely watch the company's actions. "We will go back to court and put the company out of business by taking away their license if they fail to comply," Blumenthal said.

'Zero Tolerance for Fraud'

Ameriquest would not agree to an interview with "Nightline," but it pointed out that the settlement contained no admission of wrongdoing. In a letter, the company said it had been a "leader in helping to make mortgage loans available to millions of borrowers who previously had been denied access to credit."

The company said in the letter it had "zero tolerance for fraud" and had accepted the new procedures and requirements set out in the settlement as being good for both the company and for its customers.

According to Blumenthal, had the company not come to an agreement, Ameriquest would have faced charges in court brought by some of the states involved. Officials say hundreds of thousands of Ameriquest customers may be eligible to receive restitution payments under the settlement. This includes those who, like Overton, have pending lawsuits against the company.

Ambassadorship for Ameriquest Founder

Roland Arnall, founder of Ameriquest and its primary shareholder, has been nominated to be ambassador to the Netherlands.

Arnall had been one of the top fundraisers for the Bush campaign, raising more than $12 million since 2002. He also contributes heavily to Democrats, gives millions to charitable organizations and is a founding trustee of the Simon Wiesenthal Center, an international human rights organization dedicated to preserving the memory of the Holocaust.

Arnall faced tough questions last fall from the Senate Foreign Relations Committee regarding Ameriquest's troubles.

"I have always been driven by a belief that excellence is achieved through strong and capable leadership," Arnall said. "I have made 'do the right thing my motto.'"

His confirmation, which is awaiting a full vote by the Senate, divided consumer advocates.

"I think no one has said, for example, that Roland Arnall personally supervised loans in a way that shows that he is not an individual of good character," the Leadership Conference on Civil Rights' Wade Hendersen told "Nightline."

While Hendersen said he is "profoundly disappointed that some of these practices that have now come to light would be associated with Ameriquest," he said that "at the end of the day, I'll stand by the fact that I think Roland Arnall is a man of integrity."

The Leadership Conference on Civil Rights has received hundreds of thousands in donations from Ameriquest.

Ira Rheingold, director of the National Association of Consumer Advocates, accepts no corporate money. The association represents both private and nonprofit attorneys that have pending litigation against Ameriquest.

"The notion that the person who owns that company would become a U.S. representative to a foreign country really is absolutely appalling," Rheingold said.

Arnall might be able to start packing his bags for Embassy Row. Senators on the Foreign Relations Committee said the settlement was the last stumbling block toward his nomination. The White House says it hopes Arnall will be confirmed as soon as possible.