Subprime mortgage REITs Aames Investment Corp., ECC Capital Corp. and NovaStar Financial Inc. each offered more than $1 billion apiece of ABS recently, as well as a myriad of other news.

Encore, run by a group of former executives at subprime lender New Century Financial Corp. completed its initial public offering in February. The company reported an $8.2 million, or $0.13 per diluted share, core net loss in the first quarter.

The lender earlier this month announced that its retail subsidiary Bravo Credit Corp. signed an agreement with Saxon Capital Inc.'s subsidiary America's MoneyLine Inc. to acquire several of the company's branches located in Connecticut, Maryland, New Jersey, North Carolina and Texas. The move is part of Encore's plan to expand its retail lending operations.

Aames also posted a $766,000 loss for the first quarter, or one cent per diluted share, compared with a $20.9 million, $0.20 per share net income in the first quarter last year, while NovaStar saw net income climb 13% over the previous year.

Subprime mortgage lenders have moaned about tight gain-on-sale margins in the sector, due in large part to increased competition in the space. Some lenders have vied to cut operating costs and maintain market share by offering new products or altering underwriting criteria, while other lenders have vowed to scale back lending in the space until margins return to more profitable levels.

Lenders such as Aames and Encore, along with New Century Financial and NovaStar, that operate as real estate investment trusts keep sizable portions of the mortgage loans they originate in their REIT portfolios. The loan portfolio is typically exempt from federal tax, but the structure requires that 90% of its taxable income be dispersed to shareholders in the form of dividends, leading some in the industry to deem the structures "equity vampires."

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