Ameriquest Mortgage Co.’s plans to close 229 branches and consolidate operations will take it farther from local markets and may affect the time it takes to process loans, according to a Connecticut mortgage expert.

ACC Capital Holdings, the parent company of Ameriquest, announced last week it would close the branches and lay off 3,800 employees, and centralize its loan production operations in several states, including Connecticut. It also will centralize its corporate offices in Orange, Calif.

The slowdown in the refinancing market, possibly combined with the $325 million multi-state settlement the company reached earlier this year with state attorneys general over claims of deceptive lending practices, likely caused the decision, said William Calderara, president of the Connecticut Mortgage Bankers Association and senior vice president of Fairfield County Bank Corp.

“[The settlement], combined with a slowdown in the market, took a bite out of them,” Calderara said.

Ameriquest expanded throughout the refinancing boom of the last several years and focused a lot of its business and advertising on refinancing. Now that the boom has ended, it makes sense that the company might consolidate operation, according to Calderara, who said it is not unusual to see a company making those types of changes as the market goes through such cycles.

“We are moving strategically and decisively to remain a leader in an industry that is undergoing fundamental changes,” Ameriquest Chief Executive Officer Aseem Mital said in a prepared statement.

Paul Hamilos, an analyst with A.G. Edwards & Sons – a national full-service brokerage firm – told the Associated Press that other mortgage lenders such as Washington Mutual also have scaled back on branch locations.

“You’re definitely seeing a reduction in the amount of business that is done in the conventional manner, like through loan offices,” Hamilos said.

When Ameriquest first opened, it adopted an older business model of very decentralized offices, Calderara said. That made the company fairly nimble with decision-making, and the mortgage originators knew and lived in the markets where they were working.

“I think they would have stuck with that model if the market had stayed where it was,” Calderara said. “[The consolidation] does take them away from the markets.”

The news of Ameriquest’s consolidation could be good for smaller, local mortgage companies and banks. Ameriquest’s new model means customers often will be calling other states to apply for mortgages, and because the mortgage industry still relies heavily on paper rather than new technology, it may add to the time it takes to make decisions on mortgages. The company might be able to work with technology and lessen that time, but local mortgage originators will largely be a thing of the past.

“I think it will slow their process, ultimately,” Calderara said. “I do think local companies have an advantage.”

‘The Best Strategy’

According to the Associated Press, 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 Credit – to which ACC is also parent – will be closed, with operations consolidated in several large regional locations. ACC said it would centralize its network of branches into offices in California, Arizona, Illinois and Connecticut, but would continue to offer lending services nationwide.

Ameriquest is the nation’s largest subprime mortgage lender. ACC also operates AMC Mortgage Services, formerly known as Bedford Home Loans.

“Although difficult, the [consolidation] decisions Â… are the best strategy for improving our cost structure and increasing our ability to price loans competitively – changes that are critical to our long-term success,” said Adam Bass, Ameriquest’s vice chairman, in a prepared statement.

ACC told the AP the changes would not affect its ability to adhere to the terms of a $325 million multi-state 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.

The closings have riled some state attorney generals, including Massachusetts Attorney General and gubernatorial candidate Thomas Reilly, who said Ameriquest did not properly notify banking regulators.

California’s attorney general also spoke to the AP about the layoffs.

“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.

Representatives from Ameriquest could not be reached for comment before press time.