The latest takeover speculation on Ameriquest Mortgage: Citigroup and Morgan Stanley are in talks to acquire the subprime mortgage lender, according to reports this week.

The two are the latest companies that are rumored to be eyeing Orange-based ACC Capital Holdings Corp.’s Ameriquest unit.

In addition to the investment banks, other mortgage companies, private equity investors and even hedge funds have been cited as potential suitors.

As recently as 2005, Ameriquest was the No. 1 lender to homebuyers with imperfect credit. The company has scaled back dramatically in the past year amid a restructuring and a downturn in the subprime mortgage business.

Privately held Ameriquest has been a rumored takeover target for years. Recent reports are being taken more seriously amid a wave of consolidation in subprime lending and a report that JPMorgan Chase & Co. was hired to shop ACC’s mortgage units.

The Wall Street Journal said earlier this week Citigroup and Morgan Stanley were in separate talks to acquire ACC Capital’s mortgage businesses.

Trade publication MortgageWire reported on Citigroup’s potential bid for Ameriquest today.

The subprime lending sector is undergoing consolidation.

Fort Worth, Texas-based AmeriCredit Corp. recently wrapped up its buy of ACC’s Long Beach Acceptance Corp. for $282.5 million. Long Beach Acceptance makes auto loans to buyers with credit problems.

In November, H&R Block Inc. said it is considering a sale of its Irvine-based Option One Mortgage Corp., which makes subprime home loans.

In October, Irvine’s ECC Capital Corp. said it was selling its subprime loan business to Bear Stearns Cos., for $26 million. That deal is expected to close early this year.