Aseem Mital is methodical by nature.
The chief executive of Orange-based ACC Capital Holdings Corp., parent of the country’s largest subprime mortgage lender Ameriquest Mortgage Co., lights up when asked about his management style, which is heavy on metrics and white-board diagrams.
“Process, efficiency, re-engineering,these are some of my favorite things,” Mital said.
His 11th floor corner office is filled with management books from the likes of Jack Welch and Rudy Giuliani.
Otherwise, the office is sparse, save a giant white board. A chart of rising interest rates sits on a conference table.
Mital, a native of India, is an engineer by training who started his career on the production line of a Daimler-Benz truck plant.
He’s come a long way since then, running a massive mortgage company whose subsidiaries made about $75 billion in loans last year.
But his engineering side never is far behind.
“A lot of planning is involved before a decision is made,” Mital said. “We’re very metric oriented, throughout the company. Everything must be measurable. Otherwise you can’t tell if you are improving.”
Mital has been busy with a big re-engineering project at Ameriquest, which focuses on making home loans to borrowers with imperfect credit.
The privately held company, founded 26 years ago by Los Angeles billionaire and U.S. Ambassador to the Netherlands Roland Arnall, unveiled sweeping changes earlier this month.
The company said it was closing 229 branches across the country and replacing them with four big processing centers strategically placed,as Mital notes,in each time zone.
The shift brought a headline-grabbing 3,800 layoffs,about a third of Ameriquest’s work force.
The layoffs were “a tough thing to do,” Mital said. “No matter what the strategy, no matter how good the plan is, it is always difficult.”
And, as with everything with Mital, there is a crafted plan behind the move.
The changes should allow Ameriquest to more easily adjust to the ups and downs of the mortgage business and run more efficiently, according to Mital.
Spurred Speculation
“People don’t understand what we’re doing,” he said. “People theorize motives.”
One theory is Ameriquest is trying to shore up its business during a challenging time for lenders.
“The general impression in the industry is that they’re having a very hard time,” said David Olson, a consultant with mortgage research firm Wholesale Access in Columbia, Md.
Then there’s Ameriquest’s recent $325 settlement with 49 states, which charged Ameriquest with improper lending practices. Friedman, Billings, Ramsey & Co. analyst Scott Valentin blamed the closures in part on the payout.
Mital dismisses such speculation as misinformed. The company’s branches are outdated in the face of new technologies and how borrowers seek out loans, he said.
The branches became less important with consumer shifts and after the federal Do Not Call Registry in 2003. Ameriquest then turned to advertising to drive people to its Web site and phone lines.
Names of interested customers were gathered and then shipped to the branches, Mital said.
“This was a lead-driven branch network,” he said. “We (decided it could get) done more efficiently on a centralized basis.”
The branches weren’t like those of Washington Mutual Inc. or Bank of America Corp., Mital said.
“When people think branches, they think banks,” he said, “with people coming in and out of the office, and face-to-face selling. That’s not the way our branches work. Our branches were just a point of contact.”
Market Conditions
Of course, the state of the mortgage business had something to do with the shift. The business has slowed from its peak of a few years ago. Lenders are fighting each other for loans.
And rising long-term interest rates have crimped profits. Ameriquest and its rivals sell loans packaged as bonds to investors. What the companies pay bondholders has gone up with long-term rates, while interest from mortgages has gone up more slowly, squeezing profits.
“The time was right to be decisive and make a shift,” Mital said. “The opportunity cost is lowest. You wouldn’t want to make changes like this at the peak of the (mortgage refinancing) boom.”
Speculation about Ameriquest is a pastime in the mortgage industry. The company is a big advertiser with Major League Baseball, Nascar and other sports but otherwise keeps a low profile.
The interview with the Business Journal only was Mital’s third, after one with American Banker last week and another with the trade publication last year.
Rivals often bring up the company in talking about their own businesses.
“It’s hard to read what’s going on over there,” said Brad Morrice, president of Irvine-based New Century Financial Corp., in a quarterly call with analysts last month. “They seem to be more internally focused and have been a little less aggressive.”
Loans Off
Ameriquest officials said the company’s loans are down from a year ago. In the first quarter, Ameriquest did about $2.6 billion in loans, down 46% from a year earlier. (The figure doesn’t include business from Argent and other units.)
In California and elsewhere, the industry’s growth of late has come from more exotic mortgages, such as interest-only loans, stated income loans,where a borrower’s income isn’t verified,and even 40- and 50-year mortgages.
Ameriquest has opted to go after a small number of those loans but focus on its core business of 30-year, 15-year and five-year adjustable rate mortgages, Mital said.
That’s “not the right business for us,” he said of the trendier loans.
Ameriquest planned for its loan business to decrease with the restructuring, according to Mital. It should start growing again next year, he said.
Luxury of Being Private
“As a private company, sometimes you have that advantage of doing things that are very strategic,” Mital said. “Most public companies cannot afford to take those kinds of steps.”
Ameriquest has an “amazing ability to deal effectively with big changes,” said Joy Schaefer, a former president of Irvine-based Westcorp (now part of Wachovia Corp.), where Mital worked before joining Ameriquest.
“He’s one of the smartest guys in the business,” said Schaefer, who now works for a private equity fund. “He’s very adept at handling new technology and seeing how that technology (fits into the company) from a broader perspective.”
There could be challenges, according to Olson of Wholesale Access.
“It’s going to be tough,” he said. “They’ve been a classic subprime company since Day 1. We’ve never seen anyone in the industry change their culture overnight.”
For its part, New Century doesn’t plan to follow suit.
“You may see us close some offices, we may open some offices,” Morrice said last month. “But we still feel that a branch model makes sense.”
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More on Mital, Ameriquest
Aseem Mital runs one of Orange County’s largest companies. But he’s decidedly low profile.
He took over as chief executive of Orange-based ACC Capital Holdings Corp., parent company of Ameriquest Mortgage Co., last July.
The move capped 10 years at the company, including serving as president of ACC starting in 2004. The shift to chief executive put Mital in charge of ACC’s major businesses, including Ameriquest.
Wayne Lee, who had headed Ameriquest and Argent Mortgage, stepped down last summer for personal reasons.
Besides Argent, which gets loans from independent brokers, and Ameriquest, which makes loans directly to borrowers, ACC’s other businesses are: Town & Country Credit, a smaller retail lender, AMC Mortgage Services, which handles mortgages made by the other operations, and auto financier Long Beach Acceptance Corp.
Mital was born and raised in India and started his career there working for what’s now DaimlerChrysler AG. He came to California to earn a master’s in business at the University of Southern California.
Like others at Ameriquest, Mital came to the company by way of Irvine auto financier WFS Financial Inc., which, along with former parent Westcorp Inc., was bought by Wachovia Corp. in March.
Mital, who lives in Santa Ana near Tustin, provided a look at himself and his company in an interview with the Business Journal last week. Here’s more of what he had to say.
n On ACC founder and owner Roland Arnall, now U.S. ambassador to the Netherlands (Arnall’s wife, Dawn Arnall, now serves as chairman):
“He resigned (as ACC chairman) last year. Since that time, he has received shareholder briefings. He wasn’t that involved to begin with. I’m the guy here who’s responsible.”
n On his own management style:
“I would call it a project management style. That applies, just as much, in any business. Being a good service provider and keeping costs low,that’s the most important thing for consumers. Doesn’t matter what industry, you can’t charge high prices and provide poor service.”
n On the subprime sector’s cooling:
“We’ve been through these kinds of cycles, even in my 10 years. Rates go up, volume goes down, consumer behavior changes, intense competition. This time, it’s about interest rates going up.”
n On the impact of rising interest rates:
“They affect everyone equally. It’s what you do then, as a strategy. Ours was, first, to reduce costs. By lowering costs, we will pass on the savings to the borrower and put pressure on competition as well.”
n On Wall Street’s demand for subprime loans packaged as bonds:
“It’s going amazingly well. We have a great relationship, a great reputation on Wall Street.”
n On Ameriquest’s advertising during the Super Bowl:
“Very successful. The years you have hyper growth, you invest in a brand. Bringing in brand recognition makes other direct marketing more effective.”
,Mark Mueller
