The Bear Stearns Companies Inc. said Monday that it had completed its purchase of ECC Capital Corporation's subprime mortgage banking platform for approximately $26 million. 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. The deal marks the latest in a series of recent subprime loan platforms that have been acquired by Wall Street firms, including Merrill Lynch's purchase of First Franklin from National City Corporation in early January for $1.3 billion. “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 company said. Bear Stearns also owns Irving, TX-based EMC Mortgage Corporation, which does not originate loans but instead focuses on acquiring, securitizing and servicing subprime mortgages. The company did not provide any details regarding how it plans to integrate its existing operations at EMC with the acquisition of similar resources at Encore Credit, but industry sources have suggested to Housing Wire that the Encore lending platform will feed loans into its EMC business unit, and that any ECC servicing-related resources would be rolled into EMC.