ACC Capital Holdings has sold its wholesale subsidiary and will close down Ameriquest Mortgage Co. The demise of the once mammoth subprime lender seemed to fulfill predications a year and a half ago by the chief of the nation's biggest mortgage banker.
Citi announced its markets and banking business has agreed to acquire ACC's wholesale mortgage origination operation and $45 billion in mortgage servicing rights. The deal, which includes a minimal amount of existing loans and residuals, is scheduled to close tomorrow, Sept. 1.
The acquisition of Argent Mortgage Co., which Citi negotiated an option to acquire in February, was finalized late today. It includes operational centers in Orange, Calif., and Rancho Cucamonga, Calif., and Rolling Meadows, Ill., and Schaumberg, Ill.
"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," ACC Vice Chairman said in a separate statement. "The closing of the transaction marks a positive step forward for our customers, clients and employees."
Financial terms weren't disclosed.
"Exercising our option to acquire the assets from ACH's wholesale origination and servicing business allows Citi to secure valuable and scalable platforms in a market undergoing significant change," Citi executive Jeffrey A. Perlowitz said in the announcement. "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."
ACC spokesman Chris Orlando confirmed in a telephone interview that Ameriquest will wind down operations.
Ameriquest, which at times has been ranked as the biggest U.S. subprime lender, was among the first subprime companies to make massive job cuts -- including 2,000 layoffs in May and nearly 4,000 a year earlier.
ACC announced a reorganization in March, noting at the time, "Only companies with the ability to control costs and improve loan quality are going to be successful."
The move included ACC's centralization of retail origination and portfolio retention operations to Southern California and the consolidation of New York wholesale loan production operations into its Illinois facilities.
Early last year, Countrywide Financial Corp.'s chief blamed "the Ameriquests and New Centuries of the world" for emerging problems.
"We had some irresponsible players," Angelo Mozilo said in a telephone conference call reported in February 2006. "No question the key players there [were] Ameriquest and New Century."
Mozilo forecasted some consolidation in 2006, with "people getting out of the business, the weaker ones folding."
He continued, "Eventually they gag on it."
ACC founder Rolland Arnall was ranked as the 369th richest man in the world by Forbes magazine this year. He was confirmed in February 2006 as the Bush administration's ambassador to the Netherlands following Ameriquest's $325 million settlement with 49 states to resolve charges of alleged predatory lending.