Bear Stearns Companies Inc. has gone from being a creditor of subprime lender Encore Credit Corp. to owning it.
Bear Stearns announced today it has completed its purchase of ECC Capital Corp.’s subprime lending platform, which it will continue to operate at a separate division of Bear Stearns Residential Mortgage Corp.
About 660 Encore Credit employees are now working for Bear Stearns as part of the $26 million deal. The purchase price was credited against debts due to Bear Stearns, including warehouse borrowings.
Bear Stearns will take over Encore Credit’s operating centers in Irvine, Calif.; Downers Grove, Ill.; and Glen Allen, Va. Bear Stearns also acquired $1.2 billion of ECC’s whole loan portfolio.
Shabi Asghar, formerly president and chief executive officer of Encore Credit’s parent company, ECC Capital Corp., will hold those titles as Encore’s president and CEO. The combined companies are expected to generate more than $1 billion in home loans a month.
Bear Stearns has been buying loans from ECC Capital for more than three years, and the loans have performed well compared to those of other originators, Bear Stearns said in announcing the deal in October.
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