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.