Ameriquest Mortgage Co., is closing its Houston National Center this summer as part of a plan to centralize its retail branch network.
The Orange-based home loan company is shuttering all 229 of its retail branches and laying off about 3,800 workers. This move comes on the heels of a $325 million nationwide settlement in January, in which ACC Capital and its subsidiaries agreed to pay $295 million to consumers and make sweeping reforms of practices that that states alleged amounted to predatory lending. Ameriquest also agreed to pay $30 million to 49 states and the District of Columbia for costs of the investigation or consumer education and enforcement.
Since coming to that agreement, privately held ACC Capital has been making changes to its business model, including the recent decision to close the Ameriquest retail branches. By closing these branches, Ameriquest is shifting toward a business model that emphasizes Internet and phone service over face-to-face sales associates.
The Houston layoffs will begin on July 7, according to documents filed with the Texas Workforce Commission. Seventy-six employees will be effected -- 30 national mortgage associates, 17 national mortgage specialists and 11 national loan coordinators.
Under the new business model, ACC Capital will centralize its Ameriquest retail branch network into existing regional mortgage production centers in California, Arizona, Illinois and Connecticut. In addition, the company will consolidate most corporate functions at its Southern California headquarters.
Ameriquest's regional production centers will assume the current loan pipeline and use the existing capacity to begin originating new loans.
Mark Cady, senior regional vice president of Market Street Mortgage Corp. in Houston says the shift away from face-to-face retail service could be a risky move for Ameriquest.
He says Internet and phone mortgage services may be acceptable for people who are experienced in purchasing homes, but first-time home buyers need the expertise of a local broker.
"I believe that the mortgage banking industry still needs to have that local touch to be successful," Cady says.
In addition, the restructuring comes at a time when interest rates are rising and mortgage lending is slowing.