ECC May Drop REIT Status

ECC Capital Corp., the Irvine, Calif.-based real estate investment trust, said it is considering dropping that status and becoming a "C" Corp.This announcement comes on the heels of Aames Investment Corp., Los Angeles, doing exactly that. Both firms are subprime mortgage lenders with substantial wholesale operations. In a statement issued by the company, ECC said it is examining the issue "in order to improve liquidity through the permanent elimination of required dividend distributions and utilize the operating loss carry forwards of its mortgage banking segment. ECC Capital is exploring several potential strategic actions, the realization of which will further impact the decision of whether to convert its current REIT status." This decision is one of the reasons behind ECC's request for an extension from the Securities and Exchange Commission to file its 10-K statement. Previously ECC consolidated both its wholesale and retail production operations and suspended its first quarter 2006 dividend payment. ECC's forerunner, Encore Credit Corp., started operations in March 2002 and became a REIT in February 2005 following an initial public offering.