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THE MORTGAGE MELTDOWN

Ameriquest fires big part of workforce

The parent company also shuts six centers in an effort to survive the sub-prime shakeout.

March 16, 2007|E. Scott Reckard and John O'Dell | Times Staff Writers

The parent of Ameriquest Mortgage Co., once the biggest provider of home loans to Americans with checkered credit, fired a large number of its workers Thursday and closed six operations centers around the country in a bid to survive the shakeout in sub-prime lending.

Two years ago, Orange-based Ameriquest was at the top of the game -- sponsoring the Rolling Stones on tour and the halftime show at Super Bowl XXXIX. Its founder, Los Angeles billionaire Roland Arnall, was a major political donor who was later named U.S. ambassador to the Netherlands.

But as the housing market weakened, Ameriquest and other lenders in the sub-prime market of high-risk, high-cost loans were hurt by falling loan demand and rising defaults. Ameriquest took an additional hit: a $325-million settlement to resolve accusations of predatory lending practices by 49 states and the District of Columbia.

Ameriquest Vice Chairman Adam Bass declined to say how many employees were dismissed, saying only that it was a "significant number" of the company's 6,000 employees. At its peak, the privately held company employed 15,000 people across the country.

"It was a tough day," Bass said. "Our employees are really good people."

The company told workers not to talk to outsiders. One supervisor, who asked not to be named because he was not authorized to speak, said 3,000 people would get pink slips, with more layoffs to come. The supervisor also said salaries of remaining employees had been frozen and bonuses cut in half.

Another employee, who spoke anonymously for the same reason, said laid-off workers would get 10 weeks' severance pay.

Bass and other executives said the 3,000 figure was too high, but declined to confirm or deny other details of the layoffs.

On Thursday afternoon, parking structures near the office towers of Ameriquest and sister company Argent Mortgage Co. in Orange were less than half full. A few employees wearing badges with the Ameriquest symbol -- the cracked Liberty Bell -- shook their heads and declined to discuss the layoffs as they trudged past a reporter.

At the Dave & Buster's restaurant in the Block at Orange mall, doorman Ken Pese said someone must have leaked the news to the restaurant's managers "because we usually open at 11 and we opened at 10 today."

Ameriquest and Argent employees from offices nearby jammed into the establishment from the early opening until 2 p.m. to eat, drink and trade stories, Pese said. Dave & Buster's, which typically serves 100 lunches, served 350.

At Ameriquest headquarters a few miles away, the 11-story building appeared deserted, with packing boxes strewn about the corridors.

"Oh well," said a receptionist who wouldn't give her name. "It's sad, but it's happening all over the business."

In a statement, parent company ACC Capital Holdings Inc. said the "very challenging non-prime market" had forced its hand. ACC is the parent of Ameriquest, which lends directly to consumers, and Argent, which makes loans through independent brokers. It also owns AMC Mortgage Services, a billing and collecting company.

Last month, banking giant Citigroup Inc. threw ACC Capital a lifeline by providing new funding in return for an option to buy Argent and AMC Mortgage Services. By drastically cutting costs, the company could be making itself a more viable candidate for a sale.

"While extremely difficult, these changes will strengthen [our] financial position, increase our efficiency and improve our cost structure -- enabling the company to leverage the opportunities created by consolidation in the non-prime industry," the company said in a statement.

Ameriquest had already cut back on staff several times beginning in 2005. In May, the company closed all 229 Ameriquest retail offices nationally and laid off 3,800 employees.

"Many companies sped up in the face of the down market," Bass said Thursday. "We tightened our lending standards, understanding that not all loans are good loans."

Indeed, Ameriquest's archrival, New Century Financial Corp. of Irvine, virtually collapsed in the last week after Wall Street banks cut off its funding, and it is widely expected to file for bankruptcy protection.

scott.reckard@latimes.com

john.odell@latimes.com

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