http://www.azcentral.com/business/articles/0503biz-ameriquest0503.html

Ameriquest plans layoffs for 3,800 Parent firm cuts back due to mortgage-lending falloff

Jonathan J. Higuera The Arizona Republic May. 3, 2006 12:00 AM

Citing a "cyclical" mortgage-lending industry, the parent company of Ameriquest Mortgage Co. announced plans Tuesday to close 229 retail branch offices and let go of 3,800 employees as part of a new business model aimed at cutting costs.

ACC Capital Holdings, the Orange, Calif.-based parent company, would not say how many Arizona offices would close or how many local employees would be cut. But the company lists at least 14 offices in a metro Phoenix phone book. It has about 11,000 workers nationwide.

The new business model will centralize branch-office functions into regional production centers, one of which is in Phoenix. The others are in California, Connecticut and Illinois.

Those centers will operate similar to a call center, generating leads for sales associates.

The restructuring is effective immediately, the company said.

The move should give the mortgage lender greater flexibility to offer more loan products, said Aseem Mital, chief executive officer of ACC Capital Holdings in a press release. Ameriquest is the nation's largest provider of subprime mortgage loans. The move may also indicate that subprime borrowers are turning more to alternative methods, such as the Internet and direct mail, in seeking out loans.

"We are moving strategically and decisively to remain a leader in an industry that is undergoing fundamental changes," he said.

The mortgage-lending industry has been affected by a slowing real estate market and rising interest rates. After a five-year boom, the National Association of Realtors forecasts a 5.7 percent decline in existing-home sales this year, to 6.7 million. Inventories of unsold existing homes are up 27 percent from early 2005.

In January, it reached an agreement with a group of state attorneys general and financial regulators over claims of deceptive lending practices. The multistate settlement called for Ameriquest to pay $295 million to borrowers who obtained loans from Jan. 1, 1999, through Dec. 31, 2005. It also agreed to pay $30 million to reimburse states for legal fees and other costs as well as revamp some of its lending practices.

Contact the reporter at jonathan.higuera@arizonarepublic.com or (602) 444-8831.