MORTGAGES - Citi to buy remains of Ameriquest - The banking giant will take over the former sub-prime lending leader's loan-servicing arm and a sister firm.
Ameriquest Mortgage Co., once the "Proud Sponsor of the American Dream," is closing.
Citigroup Inc. said Friday that it would buy the remnants of the Ameriquest empire from ACC Capital Holdings in Orange, and ACC said it was "preparing for an orderly wind-down of its retail mortgage business."
Ameriquest shuttered its 229 retail offices months ago. As recently as 2005, Ameriquest and its sister company, Argent Mortgage, were together the No. 1 sub-prime mortgage lender in the world.
"They were absolutely the king, the biggest of them all," said David Olson, a longtime consultant to sub-prime lenders at Wholesale Access in Columbia, Md. But, he added, not necessarily the best.
Ameriquest was the subject of a series of stories in The Times in 2005 that looked into allegations by employees and former employees who described a "boiler room" culture in which they were promised big commissions and pressured to make loans at any cost. Many borrowers were misled about loan terms and steered into mortgages they couldn't afford, The Times reported.
Early last year, when Ameriquest agreed to pay $325 million to settle predatory lending probes by attorneys general in 49 states and the District of Columbia, it adopted reforms intended to make sure that borrowers knew what they were getting, appraisals were honest and loans provided genuine benefits.
The reforms were implemented just as the housing boom began to cool and competition became brutal in the contracting sub-prime market. With share prices falling, Ameriquest and Argent laid off thousands of employees in a series of cutbacks.
New York-based Citigroup, the nation's largest bank, obtained an option in February to buy Ameriquest's loan-servicing arm, which handles collections on $45 billion in loans and distributions of the principal and interest payments to investors in mortgage bonds. It also obtained an option to buy Argent, a wholesale lender that makes loans through independent brokers rather than directly to consumers.
Ameriquest stopped taking loan applications Aug. 1.
Its end mirrors the demise of a host of independent sub-prime lenders that have closed or sold themselves off amid a rising tide of loan defaults. Unlike banks and savings and loans, which have deposits to lend and can hold many loans for investment, the pure sub-prime firms relied on Wall Street to finance their operations and buy their loans, services that have evaporated in the sub-prime meltdown.
