Bear Stearns will buy Encore Credit Corp., the subprime lending business of ECC Capital Corp., for $26 million in cash.
Both companies expect to close the deal by yearend. After that, Encore Credit will operate as a separate division of Bear Stearns Residential Mortgage Corp., the mortgage bank subsidiary of Bear Stearns.
"The Encore Credit sales force can now expect to have access to more competitive loan pricing, to have a broader product menu and to be integrated into Bear Sterns' state-of-the-art production platform technology," said Shabi Asghar, ECC Capital's President and CEO. Asghar will become CEO of Encore Credit Corp., once the deal is finalized.
As part of the deal, Bear Stearns will take over operations of Encore Credit's operating centers in Irvine, Calif.; Downers Grove, Ill. and Glen Allen, Va., and assume lease payments on the real estate.