Pointing to sour subprime industry conditions, ECC Capital (NYSE:ECR) declared a $0.07 per share dividend for the first quarter of 2007 and said Friday that the company will likely delay future dividend payments until the third or fourth quarter as the subprime lender and servicer looks to find additional sources of liquidity amid deteriorating market conditions. ECC Capital, which recently sold its Encore Credit franchise to Wall Street bank Bear Stearns (NYSE:BSC) in a deal worth $33 million, had previously announced an intended $0.80 per share dividend. Including the first quarter dividend announced today, the company has distributed less than half that amount, with $0.49 of the intended per-share dividend payment remaining outstanding. The company had previously indicated that it would distribute the remaining dividend balance at the end of the second quarter. The company said in a press statement that its ability to make future dividend distributions will depend on the release of additional holdbacks and reserves from $1.2 billion in whole loan sales associated with the Bear Stearns acquisition, as well as cash flows from ECC Capital's residual interests in securitizations. Loan originators will often hold a class of bonds associated with a securitization, called a residual class, that absorbs the first losses associated with the pool of loans securitized. While company officials say that ECC is exploring avenues to hedge its residual interests, the company admitted that it has not yet been able to obtain satisfactory financing of its residuals, due in part to present market conditions, and warned that it might not be able to successfully fund future dividend payments as a result. The company also announced that it will file an extension with SEC for its annual financials, as a result of the Bear Stearns purchase, and that Greg Lubushkin, Chief Accounting Officer, will resign his post at ECC Capital as of March 31. Lubushkin has served as ECC Capital's Chief Accounting Officer since November 2004; no reason for Lubishkin's departure was provided. ECC Capital's stock has been trading below the $1.00 watermark set by the New York Stock Exchange, prompting the exchange to issue a warning earlier in the week that the company could be delisted should it continue to trade at current price levels. ECC stock closed at $0.69 in light trading on Thursday. For more information, visit http://www.ecccapital.com. Full disclosure: The author owns no securities associated with any of the companies mentioned in this story. Housing Wire will always disclose the financial interests of its authors.