ACC Capital Holdings sent shock waves through the mortgage industry when it announced yesterday it was closing 229 of its Ameriquest retail branches and laying off 3,800 of its 11,000 workforce.  Ameriquest is one of the largest sub prime lenders focusing on poor people and people with bad credit ratings.  ACC wants to cut costs and stay competitive in a mortgage industry that's slowing down as interest rates rise and home sales slow.

Ameriquest settled an investigation in January started by investigators in 49 states.  The heavy-handed sales tactics of some of its agents was questioned.  Ameriquest agreed to pay $325 million and change its business practices to settle with the states.

Obviously the investigation hurt more than ACC cares to admit.  In addition to all the negative press, the impact of the declining number of new applications in the mortgage market led ACC to this retrenchment decision.

Ameriquest is not the first to cut back.  Washington Mutual, Aames Investment Corp. and ECC Capital Corp cut their staff during the past few months.