Ameriquest's Anaheim office will be affected by layoffs announced Tuesday by parent company ACC Capital Holdings, which in November cut 1,500 jobs. Analysts are at a loss to explain the latest round of office closures.
- Where: Based in Orange
- What it does: One of the nation's leading mortgage lenders to consumers with spotty credit histories.
- Loan originations: $80 billion in loans last year
- Employees: Around 8,000 nationwide
- Trivia: Bought two spots during the 2006 Super Bowl at an estimated $2.5million per ad. "Don't Judge Too Quickly. We Won't" was the tagline to Ameriquest's Super Bowl ads. Also has a blimp to promote itself.
The Orange-based parent of Ameriquest Mortgageand Town and Country Creditsaid Tuesday that it is cutting 3,800 jobs and closing retail branches nationwide amid a slowing housing market and fierce competition for customers.
The cuts represent about a third of the work force at ACC Capital Holdings, which closed 229 branches across the U.S., mostly outside Orange County. ACC, a leader in making loans to consumers with poor credit histories, is keeping regional centers with retail services in Sacramento, Arizona, Illinois and Connecticut.
ACC said it laid off some workers at its Orange headquarters. It declined to say how many workers were laid off in the county or if any local branches were closed.
"We are moving strategically and decisively to remain a leader in an industry that is undergoing fundamental changes," said Aseem Mital, chief executive of ACC, in a statement.
Adam Bass, vice chairman of ACC, said the reorganization is the best strategy for "improving our cost structure and increasing our ability to price loans competitively."
The layoffs by ACC Capital are the most extreme example yet of cost-cutting in this mortgage-industry cycle, analysts said.
More job cuts likely are in the offing from other lenders, as home price appreciation slows, tempering demand for loans, analysts said. Most other mortgage companies maintain fewer retail branches than Ameriquest and will likely keep them, analysts said.
Irvine 's New Century Mortgage, for example, has more than 200 retail branches and along with ACC, is one of the largest lenders in the country to borrowers with spotty credit. The company declined to comment on ACC's strategy, which includes selling more loans online.
Richard Eckert, an analyst with Roth Capital Partners in Newport Beach, said Ameriquest had an network of branches "that would have been the envy of other originators as recently as last year."
Analysts are at a loss to explain exactly why ACC eliminated so many retail offices. The company is privately held and little is known about its profitability. Ameriquest originated about $80 billion in loans last year, about 13 percent of the subprime market, industry analysts said.
Lenders historically have made up in retail loan fees what they spend on personnel, Eckert said. Perhaps the situation had changed at Ameriquest, he said.
Mortgage lenders have been squeezed lately as rising short-term interest rates have increased their cost of funds. At the same time, intense competition among lenders is keeping a lid on the long-term rates they charge borrowers.
Some Ameriquest customers will have to rely more on the Internet in the future, Eckert said. Other consumers can get face-to-face time with their independent mortgage broker who will work with Ameriquest, he said.
But the loss of branches means Ameriquest will have fewer workers in various markets to network with brokers and real estate agents, analysts said.
"I don't know how they are going to acquire leads," Eckert said.
Clinton Shepherd, a former loan underwriter with Ameriquest, said some 300 workers at its Anaheim office, 1600 SouthDouglass Road, were either fired Tuesday or told they were needed for just 60 more days to wrap things up.
Anaheim staff crowded into a conference room - standing room only - to hear the bad news, Shepherd said. Workers then broke off into groups to learn whether they would be fired immediately, he said.
The extent of the closings came as a shock, Shepherd said, especially since the lender closed some of its underperforming offices when it laid off 1,500 workers in November.
"They didn't really retain anyone," Shepherd said. "I'm kind of wondering what happened."
Bose George, an analyst with Keefe, Bruyette & Woods in New York, said the elimination of retail branches could help ACC comply with a $325 million settlement with 49 states over claims of deceptive lending practices.
Controlling four regional offices and a finite number of brokers should be easier than a far-flung network of branches, said George and other analysts.
Source: OC Register |
