Ameriquest Plans to Cut 3,800 Jobs

The move to cut 3,800 jobs from a total of 11,000 is a dramatic shift by Ameriquest, which in recent years became one of the largest lenders to people with poor, or subprime, credit ratings.

As the company boomed, it faced allegations that some sales agents used heavy-handed tactics and deception to persuade consumers to take its loans, virtually all of which were refinancings of existing mortgages.

In January, Ameriquest settled an investigation by 49 states by agreeing to pay $325 million and to change its business practices. The company did not admit wrongdoing.

On Tuesday, Ameriquest executives said in a statement that the company decided to close its branches as a cost-cutting move "in an industry that is undergoing fundamental changes."

ACC Capital Holdings, Ameriquest's parent, said it would centralize loan production in four regional offices in California, Arizona, Illinois and Connecticut. Customers will be able to fill out loan applications on the Internet, then be contacted by representatives in one of the regional offices, the company said.

"We see a fundamental shift underway in how nonprime consumers shop for mortgage loans, away from bricks and mortar," said Adam Bass, ACC Capital's vice chairman, said in a statement.

"This is about more than today's challenging mortgage market conditions. It's about getting ahead of the competitive curve for the long term," he said.

Some analysts said the decision to jettison Ameriquest's branches suggested that the company might be concerned it couldn't effectively control what went on in those offices.

"I would guess it is very difficult to provide profit incentives to branch managers in far-flung locales and expect them to comply with all relevant laws," said Daniel K. Osborne, a Phoenix-based investment fund manager who specializes in real estate.

Asked whether closing the branches would give Ameriquest greater control over its lending practices, a company spokesman referred to Bass' statement.

"The strategy and business practices of our new retail model are well aligned with our commitment to consumer-friendly lending policies and with the business enhancements included in our multistate agreement" with regulators, Bass said.