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.
Ameriquest used to have a different high profile, sponsoring Major League Baseball, a Super Bowl halftime show starring Paul McCartney and a tour by the Rolling Stones. The company paid the Texas Rangers baseball team so that the Ballpark in Arlington would be named Ameriquest Field, but it pulled out of the deal this year.
Founder Roland E. Arnall, an immigrant who became a billionaire, was the most generous political donor to George W. Bush, who appointed him ambassador to the Netherlands. At its peak, Arnall's operation employed about 16,000 people, company executives have said.
On Friday, Citigroup said most of the remaining 2,000 employees -- the bulk of them in Orange and Rancho Cucamonga but some in Illinois -- would retain their jobs.
"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," Adam Bass, vice chairman of ACC Capital Holdings, said in a statement. "The closing of the transaction marks a positive step forward for our customers, clients and employees."
Citigroup described the deal as a way to acquire "operational and pricing efficiencies" in a line of business that is currently "undergoing significant change." The terms of the deal weren't disclosed. Citigroup and Arnall reportedly had poured hundreds of millions of dollars into Argent's operations in February to beef up its sagging fortunes. Like other wholesale sub-prime lenders, Argent has shriveled in volume because investors no longer will buy sub-prime loans or the securities backed by them.
Although the wholesale lending business in sub-prime has virtually evaporated, the purchase of what remains of Argent will position Citigroup to reenter the market if it revives, Citigroup spokeswoman Danielle Romero-Apsilos said.
"We will restart the origination business slowly, under new management and a new brand, and do everything in accordance with federal, state and local law," she said.
Citigroup said it expected the deal to close today.