Bear Stearns Completes Acquisition of Subprime Mortgage Unit

The Bear Stearns Companies Inc. has completed its purchase of ECC Capital Corporation’s subprime mortgage banking platform for approximately $26 million, the two companies announced today.
 
Bear Stearns announced the agreement to purchase the principal assets of the subprime mortgage origination platform of ECC Capital’s subsidiary, Encore Credit Corp., in October 2006. Encore Credit will retain its brand name and operate as a separate division of the firm’s mortgage bank subsidiary, Bear Stearns Residential Mortgage Corporation (Bear Res). Shabi Asghar, formerly ECC Capital’s President and Co-CEO, has joined Bear Stearns as Encore Credit’s President and CEO.

"We are extremely excited to be welcoming nearly 660 people from Encore Credit to Bear Stearns," said Jeff Verschleiser, co-head of mortgage trading for Bear Stearns. "This deal is the next step in the vertical integration of our dynamic mortgage franchise by providing us with a significant stake in the subprime market."

Combined, Bear Res and Encore Credit will generate more than $1 billion in conforming, Alt-A and subprime loans per month. As part of the acquisition, Bear Stearns will take over Encore Credit’s operating centers in Irvine, Cal., Downers Grove, Ill. and Glen Allen, Va. Bear Stearns also acquired $1.2 billion of ECC’s whole loan portfolio. The $26 million purchase price for the Encore Credit platform was credited against certain amounts due Bear Stearns, including warehouse borrowings.