Alexa

Citigroup acquiring mortgage and servicing unit from ACC Capital

Citigroup acquiring mortgage and servicing unit from ACC Capital

Ameriquest Mortgage Co., once the largest U.S. subprime lender, is closing.
The company stopped taking new mortgage applications Aug. 1, its parent, ACC Capital Holdings, disclosed late Friday.
Along with shuttering Ameriquest, ACC also said it was selling its other assets, a wholesale mortgage origination operation and a mortgage servicing business, to Citigroup Inc. for an undisclosed sum.
The acquisition includes servicing rights for $45 billion (euro32.83 billion) worth of loans and is expected to close Sept. 1. Terms of the deal were not disclosed.
The sale includes operational centers in Orange and Rancho Cucamonga, along with Rolling Meadows and Schaumburg, Illinois, as well as a broker network extending across 48 states.
"ACC Capital Holdings is going to maintain operations as it prepares for the orderly wind-down of our retail mortgage business, which is no longer accepting applications," the company said in a statement.
Ameriquest rode the housing boom to become a hugely successful lender to people with less than stellar credit.
However, it has been operating on a greatly diminished scale since closing down its national network of offices late last year and consolidating operations into several retail call centers.
Citigroup, the largest U.S. financial institution, had agreed in February to provide working capital to Orange-based ACC Capital. As part of that infusion, Citi had an option to acquire the assets and become the company's primary warehouse lender.
"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," said Adam Bass, vice chairman of ACC Capital Holdings.
"The closing of the transaction marks a positive step forward for our customers, clients and employees. We are working closely with Citi to ensure a seamless transition," he said.
Citigroup shares rose 65 cents to close at $46.88.
"Through this acquisition, we gain important operational and pricing efficiencies and the ability to extend the high lending standards of our existing residential mortgage business from point of origination through securitization and servicing," Jeffrey Perlowitz, head of global securitized markets in Citi's fixed income, said in a statement.
Roland Arnall, a billionaire who now serves as U.S. ambassador to the Netherlands, is the primary owner of ACC Capital Holdings. He founded the company as Long Beach Savings in 1979 and built it into a major subprime lender.
But last year, it got caught in the wave of delinquencies and defaults that swept through the subprime mortgage market.
In 2006, ACC agreed to pay $325 million in a multistate settlement over claims of deceptive lending practices.
The lender did not admit to any wrongdoing as part of the settlement but agreed to provide borrowers with full disclosures on the terms of loans, stop giving its lending agents financial incentives to include higher fees or other penalties on loans, and change how it handles appraisals.


Updated : 2021-02-26 14:47 GMT+08:00