Bear Stearns is moving into the subprime lending business with the acquisition of Encore Credit Corp.’s mortgage banking platform.
Encore Credit, a subsidiary of ECC Capital Corp., will operate as a separate division of Bear Stearns Residential Mortgage Corp. Bear Stearns will take over Encore Credit’s operating centers in Irvine, Calif.; Downers Grove, Ill.; and Glen Allen, Va.
Bear Stearns will also acquire selected portfolios of whole loans in the deal, which is part of the company’s strategy of vertical integration in the mortgage business.
Bear Stearns Residential Mortgage Corp. began operations in April 2005, and the company says its Web-based technology platform, BearDirect.net, streamlines the home loan process for mortgage brokers. The company says it is now lending $600 million per month, primarily in the form of Alt-A loans. The company expects the addition of Encore Credit’s mostly subprime mortgage origination business will bring loan production to $1 billion per month
Bear Stearns has been buying loans from ECC Capital for more than three years, and their performance “has been favorable compared with other originators in the marketplace,” said Jeff Verschleiser, a senior managing director in the company’s mortgage department, in a statement.
“Encore has a very strong sales organization, and as part of Bear Stearns Residential Mortgage Corporation we will be able to expand Encore Credit’s product mix and improve its pricing and funding costs,” Verschleiser said.
Headquartered in Irvine, Calif., ECC Capital is a mortgage finance real estate investment trust (REIT) that originates and invests in residential mortgage loans, with an emphasis on nonconforming borrowers.