Posted on 09/01/2007 8:06:23 AM PDT by NormsRevenge
LOS ANGELES (AP) --- Ameriquest Mortgage Co., once the nation's largest subprime lender, will close with barely a whimper, after the other assets of its parent company were sold Friday to Citigroup Inc.
Ameriquest, which saw its fortunes soar during the housing boom by lending to people with less than stellar credit, is the latest victim of a mortgage crisis that has left bankrupt companies and cash-strapped borrowers in its wake.
Along with shuttering Ameriquest, Orange-based ACC Capital Holdings also said it was selling its wholesale mortgage origination operation and a mortgage servicing business to Citigroup for an undisclosed sum.
"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.
Ameriquest was once so successful it paid millions of dollars to tack its name onto the Texas Rangers' baseball park.
However, it stopped taking new mortgage applications Aug. 1, ACC disclosed late Friday.
Ameriquest had been operating on a greatly diminished scale since closing its national network of offices late last year and consolidating operations into several retail call centers.
Under the agreement with ACC, Citigroup acquires servicing rights for $45 billion worth of loans. Terms of the deal, expected to close Sept. 1, were not disclosed.
Citigroup is the nation's largest financial institution.
The sale includes operational centers in Orange and Rancho Cucamonga, along with Rolling Meadows and Schaumburg, Ill., as well as a broker network extending across 48 states.
Citigroup had agreed in February to provide working capital to ACC. As part of that infusion, Citigroup 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.
Citigroup shares rose 65 cents to close at $46.88.
Through the deal, the company expects to gain "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 in Citigroup's fixed income, currencies and commodities unit, said in a statement.
Ameriquest made a billionaire of its founder and chief owner, Roland Arnall, who is now U.S. ambassador to the Netherlands. He founded his company as Long Beach Savings in 1979 and built it into a major subprime lender.
For years, Ameriquest operated successfully alongside competitors such as New Century Financial Corp. and Countrywide Financial Corp.
But last year, ACC got caught by a wave of delinquencies and defaults that swept through the subprime mortgage market.
During the past year, the company cut thousands of jobs.
Meanwhile, New Century declared bankruptcy, and Countrywide exited the subprime mortgage business altogether, recently borrowed $11.5 billion and sold a $2 billion stake to Bank of America so it could keep operating its retail banking and mortgage lending businesses.
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.
In March, the Texas Rangers severed a 30-year naming rights deal with Ameriquest and rebranded their home field as Rangers Ballpark in Arlington.
fyi AmeriQuest
The Dems want a bailout of this loans; over my dead body. We went through this with the S and Ls. No more.
So, ah, does this mean I won’t hear any more radio ads shouting, “No credit? Bad credit? NO PROBLEM!”
IMO, all these banks and mortgage companies were qualifying buyers who had no business buying houses beyond their incomes or inflated incomes. One would assume that they had the brains to to realize that their “house of cards” would collapse at some point. When two-income families borrow up to their last dime and one of them loses their job, disaster follows. Stupidity is not a reason for the taxpayers to subsidize this fiasco. Mortgage lenders that were making “big bucks” during the past five years should have “saved” some of their incomes. It’s reality time for the bubble has burst.
I's breakin' my heart!!! I'm starting up a "Victim Fund" to help these poor victim businesses.
This has to easily be the fifth company I’ve seen labeled as “once the nation’s largest.”
I recall New Century, some other company (Countrywide?), another (Intelli-something or Infini-something?), and at least one more whose name I can’t recall at the moment.
Everybody can’t be the “largest” unless, I suppose, the largest goes TU and second-largest becomes the largest and goes TU, etc. That’s just “largest” on a technicality in my book.
Anyway, it’s interesting regarding New Century that even as they were shutting the doors quite a few of the ex-employees were meeting for drinks and planning (on the back of a napkin) new specialty/boutique-type lending companies they planned to start immediately using contacts they had developed at New Century and elsewhere.
It’d be interesting to see how that’s working out.
So where do you want to go see a pro baseball game in Texas - Ameriquest Field in Arlington, or Enron field in Houston?
Countrywide was larger, but most if its loans weren’t subprime. They did conventional and Alt-a.
Whoopi. Now I'll lose at least 50 more pieces of junk mail a week.
Isn’t this the company that built a zeppelin and painted it like a ‘60’s acid poster as a symbol of some “give back to the children” scam they planned? I remember seeing the thing fly over western Washington a few years ago and read some newspaper article spouting how groovy the company was.
You beat me to it...tho’ I thought I only heard that 4 times now...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.