ACC Capital Holdings, parent of Ameriquest, Argent and AMC Mortgage Services, said late Wednesday that it has secured additional working capital from Citi's Markets and Banking Division to strengthen ACC Capital's financial position as the company repositions to adapt to the current market environment. Citi has also agreed to become ACC Capital's primary warehouse lender. ACC Capital also said that that Citi owns an option, in the form of a conditional purchase agreement, to acquire ACH's wholesale mortgage origination and mortgage servicing platforms, subject to certain requirements, including achieving business milestones and satisfaction of regulatory filings and approvals. Ameriquest's retail branch network and brand are not included in the purchase agreement, the company said in a press statement. Ameriquest and Citi had long been rumored to be in discussions regarding a purchase of the troubled subprime lender, which was recently placed on review for a potential downgrade in servicer stability by rating agency Moody's Investors Services. Industry sources expressed some surprise at the move, saying that the conditional purchase agreement likely amounts to an insurance policy on Citi's warehouse credit extension. "This isn't a purchase, it's an insurance policy," said one source, who requested anonymity. "Basically, Citi is extending a warehouse credit line and has the option to then take an equity stake in wholesale operations should it become necessary to do so."
"Ameriquest didn't just up and decide to start warehousing all or most of its loans through Citi, especially if the company could have obtained terms with other credit providers," said a seperate source, on the condition her name not be used. "[The agreement between Citi and ACC Capital] suggests the company was either in knee-deep with Citi or another line-of-credit provider, and was forced to make some operating decisions in order to meet covenants in place with Citi or another credit provider." For its part, ACC Capital said its relationship with Citi was voluntary, characterizing the move as a result of a "thorough review of the current market and the different strategic alternatives currently available to an independent mortgage lender." ACH's wholesale origination business produced more than $23 billion in home loans in 2006, and ACH's mortgage servicing and special servicing platforms service a loan portfolio of more than $65 billion. "Citi is pleased to be able to provide working capital to ACC Capital Holdings," said Jeffrey A. Perlowitz, head of global securitization in Citi's Fixed Income, Currencies and Commodities unit. "We have extensively reviewed ACH's progress in strengthening its operations and business practices, and are impressed with what the company has accomplished." For more information, visit
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