Ameriquest to Close; Citigroup Exercises Purchase Option on ACC Capital
Citigroup Inc. said late today that it will acquire the wholesale origination and mortgage servicing business of ACC Capital Holdings as part of a purchase option that was inked in February. (Argent Mortgage is the company's wholesale arm; AMC Mortgage Services is the company's capital markets and loan servicing operation). The move means that Ameriquest Mortgage Company -- the nation's largest subprime lender during the recent housing boom -- will close, confirms the Wall Street Journal. From Citigroup's press release:
The acquisition, which was finalized late this afternoon, will include the purchase of servicing rights on $45 billion of loans, as well as a minimal amount of existing loans and residuals. The financial terms of the transaction were not disclosed. "Exercising our option to acquire the assets from ACH's wholesale origination and servicing business allows Citi to secure valuable and scalable platforms in a market undergoing significant change," said Jeffrey A. Perlowitz, Head of Global Securitized Markets in Citi's Fixed Income, Currencies and Commodities unit, where the assets will reside.Ameriquest had secured working capital in March from Citigroup as part of a deal that established the purchase option. At time, sources in the industry that spoke to me characterized the move as an "insurance policy." Ameriquest had been listed on the Mortgage Lender Implode-o-Meter as "imploded" since March on the basis of collective evidence, but today's move writes the final chapter for each of ACC Capital's three major business units. Citigroup did not specify in its press release how it intends to fold the Argent and AMC Mortgage Services businesses into its own operation. Update: The OC Register's Mortgage Insider now has a post on this, which provides some details about Citigroup's plans for Argent:
Danielle Romero-Apsilos, a spokeswoman for Citigroup, said Argent is still making a small amount of loans. â€œWe will restart the origination business slowly and it will be under new management and we will have a new brand,â€? she said. Citigroup plans to keep the Orange office as well as three other operation centers that will report to New York, she said. The company is picking up about 2,000 employees nationwide from ACC and plans to keep most of them, she said.