Ameriquest to be shut down
The subprime lender's parent company has sold its mortgage assets and services to Citigroup.
LOS ANGELES - Ameriquest Mortgage Co., once the nation's largest subprime lender, has stopped taking applications, and its parent company has sold its remaining mortgage assets and service business to Citigroup Inc., the company said yesterday.
Citigroup has agreed to buy the wholesale mortgage-origination and -servicing assets of ACC Capital Holdings. ACC's only other holding was Ameriquest, which is being shut down.
The acquisition includes servicing rights for $45 billion worth of loans, and is expected to close today. Terms of the deal were not disclosed.
Although Citigroup is not buying Ameriquest, ACC said yesterday that Ameriquest had stopped taking applications on Aug. 1 and would close the business entirely.
"ACC Capital Holdings is going to maintain operations as it prepares for the orderly wind-down of our retail mortgage business, which is no longer accepting applications," the company said in a statement.
Citigroup agreed in February to provide working capital to ACC Capital. As part of that infusion, Citi had an option to acquire the assets.
"To have completed this transaction in the current business environment with a leading financial institution such as Citi is an affirmation of the hard work and dedication of our employees," said Adam Bass, vice chairman of ACC Capital Holdings.
"Through this acquisition, we gain important operational and pricing efficiencies and the ability to extend the high lending standards of our existing residential mortgage business from point of origination through securitization and servicing," Jeffrey Perlowitz, head of global securitized markets, said in a statement.
ACC Capital has been caught by a wave of delinquencies and defaults that have swept through the subprime-mortgage market. Over the last year, the company shuttered numerous Ameriquest mortgage branch offices, consolidated call centers, and cut thousands of jobs.
In 2006, ACC agreed to pay $325 million in a multistate settlement over claims of deceptive lending practices.
The lender did not admit to any wrongdoing as part of the settlement, but agreed to provide borrowers with full disclosures on the terms of loans, stop giving its lending agents financial incentives to include higher fees or other penalties on loans, and change how it handles appraisals.