Another California Mortgage Lender Hit By Layoffs

In another indicator of the shakiness of the bad credit mortgage industry, up to 300 Sacramento-area employees of Ameriquest Mortgage Co. were given the pink slip Thursday, according to the Sacramento Bee.

A spokesman would not say how many jobs were eliminated at its Rancho Cordova office, but some employees estimate between 250-300 were employed at the location.

In a press release Thursday that announced unspecified layoffs across the country, the mortgage company, based in Orange County, said local loan operations would merge into the its Southern California offices.

Locally, the hammer dropped in an e-mail sent to employees at Ameriquest’s Mather Field offices Thursday, while mortgage originators like Perry Mayfield were working the phones chasing California home loan leads.

“We saw it coming for a couple of weeks,” said Mayfield, who’s worked just six months for Ameriquest. After the e-mail announcing layoffs arrived, “Sure enough, the top guys gather us around and say, ‘Unfortunately, we have some bad news.’”

By noon, the mortgage lender’s parking lot was about empty and security guards were posted in the lobby. Visitors were immediately escorted out the front door.

Nationally, the layoffs come as the industry reels from weeks of bad news. Some news reports have tallied at least 25 subprime lenders, which make bad credit mortgage loans to borrowers with poor credit ratings, floundering or fleeing the shaky $1.3 trillion industry in recent months.

Once the industry was fueled by prospective buyers looking to get into homes at low mortgage rates. Now, rising numbers of foreclosures have reversed fortunes recently and sent the subprime market crashing.

Ameriquest is the second California mortgage lender to shed employees in recent weeks. Folsom-based Central Pacific Mortgage closed in February.

What’s more, New Century Financial Corp., the nation’s second-largest bad credit mortgage lender with $60 billion in loan originations in 2006, is teetering on the verge of bankruptcy proceedings.

In announcing its downsizing, Ameriquest’s parent company said it was necessary to rein in its costs and increase their efficiency amid the current turmoil.

“This is a very challenging non-prime market. Only companies with the ability to control costs and improve home loan quality are going to be successful,” said the statement from ACC Capital Holdings.

It’s not the mortgage company’s first round of layoffs.

In May, Ameriquest’s parent closed 229 of its branch offices and laid off 3,800 employees nationally in an effort to consolidate its retail mortgage loan lending operations.

Those job cuts amounted to a 33 percent reduction of ACC Capital’s work force, which at the time stood at 11,000.

The subprime industry’s problems had been predicted by some, who believed lenders had gone overboard making risky loans to home buyers with sketchy credit. Now many of those firms are in deep financial trouble because of higher mortgage costs and a slumping housing market.

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