Accredited Home Lenders, which plays in both the debt and equity courts, is pumped for the fourth quarter. Perhaps that's because co-founder Ray McKewon is betting his firm, a subprime lender, will grow despite a rising interest rate environment (see ASR 6/30/03). Or it may have to do with rumors of a sixth mortgage securitization in the works.

Accredited is expected to price a $414 million deal in the near future, which would be wrapped by Ambac, said one source. There's a change in the investment banking lineup for this transaction, however. Credit Suisse First Boston is said to be the lead on this deal with Lehman Brothers taking second chair. The lender's five previous securitizations were all led by Lehman.

McKewon continues to make public appearances following Accredited's February IPO. He was spotted this week at the Roth Capital Partners' conference, and was the guest speaker at a meeting of the New York offshoot of the National Association of Stockbro- kers, where McKewon revealed he was actually a stockbroker himself, in 1976, before he moved into the mortgage business.

There is little detail on the firm's pending deal. In his speaking appearance, McKewon responded to questions pertaining to what loans are sold and what are kept by Accredited. Noting concerns on both sides - the need by the firm to hold onto solid performers itself, while not skewing market attitude by selling potential duds to investors - McKewon explained his firm holds onto only a select number of first-liens loans. The remainder of first-lien and all second-lien loans are bundled for sale.

Despite rising interest rates, McKewon predicts, "Accredited will grow its earnings and its originations." Accredited's pool of subprime borrowers does not shrink in the wake of higher interest rates, he argues. And while no housing bubble has been found, Accredited's team is keeping its head out of the sand. "There will be one [on a regional level]," McKewon said. A new automated underwriting engine for the firm is expected to be unveiled next year.

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