ECC/Encore Takes Huge Loss

Subprime lender ECC Capital Corp., Irvine, Calif., posted a stunning $54 million loss in the third quarter, citing loan buybacks and early payment defaults.Through the first nine months of the year, the publicly traded nondepository lost almost $80 million. In October, investment banker Bear Stearns & Co. agreed to purchase the money-losing subprime production arm of ECC Capital. In an interview with MortgageWire, a Bear Stearns spokeswoman denied that there were any buyback issues between the Wall Street firm and Encore Credit Corp., the mortgage unit of ECC. (Bear had been warehousing and purchasing loans from Encore.) In its earnings statement, ECC said it is continuing to "experience higher levels of repurchase claims generally relating to early payment defaults." Almost 6% of Encore's loans are in foreclosure. The company also has a 30-plus day delinquency rate of 3.3%. (For more details, see the Nov. 20 issue of National Mortgage News.