The parent company of Ameriquest Mortgage Co. and Town & Country Credit said Tuesday it will close 229 branch offices and lay off 3,800 employees nationwide as part of a plan to consolidate its retail mortgage lending operations.
The restructuring by Orange-based ACC Capital Holdings Corp. is designed to cut costs and help the lender stay competitive, company officials said.
The job cuts amount to a one-third reduction of ACC Capital’s work force of 11,000. All branch offices of Ameriquest and Town & Country will be closed, with operations consolidated in several large regional locations.
“We are moving strategically and decisively to remain a leader in an industry that is undergoing fundamental changes,” CEO Aseem Mital said in a statement.
The downsizing came as rising interest rates have put a damper on the once-booming loan refinancing market, particularly the sub-prime business, which is often geared toward homeowners looking to cash in equity to pay off mounting debt at a lower interest rate.
Ameriquest is the nation’s largest sub-prime mortgage lender. ACC also operates AMC Mortgage Services Inc., formerly Bedford Home Loans.
ACC said it was centralizing its network of branches into offices in California, Arizona, Illinois and Connecticut, but would continue to offer lending services nationwide.
In addition to the branch closings, effective Tuesday, the company was also trimming positions at its headquarters.
By eliminating its branch offices, the company is shifting toward a business model that emphasizes Internet and phone service over sales associates who interact in person with borrowers.
“We see a fundamental shift under way in how non-prime consumers shop for mortgage loans, away from bricks and mortar,” said Adam Bass, ACC’s vice chairman.
“This is about more than today’s challenging mortgage market conditions. It’s about getting ahead of the competitive curve for the long term,” he said.
Other mortgage lenders such as Washington Mutual have also scaled back on branch locations, said Paul Hamilos, an analyst with A.G. Edwards & Sons Inc.
“You’re definitely seeing a reduction in the amount of business that is done in the conventional manner, like through loan offices,” Hamilos said.
ACC said the changes would not affect its ability to adhere to the terms of a $325 million multistate settlement reached earlier this year with state attorneys general over claims of deceptive lending practices.
The lender did not admit to any wrongdoing as part of the settlement but agreed to reform several business practices. It said it would 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.
Authorities intend to scrutinize the downsizing.
“We’re going to sit down with Ameriquest, obtain details of this reorganization and make sure that they fully comply with the consumer protections and the reforms that we obtained as part of this settlement,” said Tom Dresslar, spokesman for California Attorney General Bill Lockyer.