FirstCity Capital Corp., the capital markets subsidiary of FirstCity Financial Corp., has put all securitizations on hold until it can find a new financial partner to execute its long-term business plan of pursuing the home-equity business.

Pending a merger, said Chief Executive James Aronoff, the company will forgo the securitization market and pursue whole loan sales as a method of financing.

"Until we shore up the capital position, we have temporarily exited the market as an issuer," Aronoff said. "Once we recapitalize, I think we'll be in a better position to reenter the securitization market."

The company already postponed a Lehman Brothers-led $300 million deal slated to price in May and has put on hold a $400 million deal scheduled for November as well.

Formed just two years ago to meet the growing demand by originators of home-equity loans for consistent and predictable underwriting and funding practices, the Valhalla, N.Y.-based company originated $147 million of home-equity loans during the first half of this year.

Since its inception in August 1997, FirstCity Capital has originated or acquired more than $500 million of home-equity loans and successfully completed two securitizations totaling more than $320 million of asset-backed securities.

"We are pleased to have sold transactions in both strong and difficult markets, and to have built a track record for dependability and reliability that is the hallmark of our business," said Christopher Morrissey, FirstCity Capital's president and chief operating officer. "As we seek a new financial partner, we plan to continue our methodical and sound program of working fairly and consistently with our origination partners and delivering a quality product to ABS investors."

FirstCity Capital plans to selectively bring the servicing of newly originated loans in-house during the beginning of the fourth quarter. In addition, the company acquired HomeFirst National, a St. Louis area direct-to-customer retail mortgage banking company, in March.

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