Bear Stearns Companies Inc. has acquired ECC Capital Corp.’s mortgage banking platform.

Under the agreement, Bear Stearns’ mortgage bank subsidiary, Bear Stearns Residential Mortgage Corp., will purchase the subprime mortgage origination platform of ECC Capital’s subsidiary, Encore Credit Corp. Encore Credit, specializing in subprime mortgage origination, will operate as a separate division of Bear Stearns Residential Mortgage Corp.

As part of the acquisition, Bear Stearns will take over Encore Credit’s operating centers. It will also acquire selected portfolios of whole loans. Bear Stearns expects to employ most of the personnel of Encore.

“The acquisition of ECC Capital’s origination unit will give Bear Stearns a substantial stake in the subprime lending business,” said Jeff Verschleiser, a senior managing director in the mortgage department at Bear Stearns. “We continue to diversify our product mix to give independent mortgage brokers additional options through Bear Stearns Residential Mortgage Corporation. With our advanced technology, sophisticated risk management systems and capital markets
expertise, we are well positioned to continue to broaden our already formidable mortgage franchise.”

Shabi Asghar, ECC Capital’s president and co-CEO, said, “As part of the Bear Stearns team, 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 Stearns’ state-of-the-art production platform technology, which will provide our brokers with
greater efficiency and service. Our origination business seems to be a natural fit with Bear Stearns’ expansion in the subprime market.” Asghar will be president and CEO of the business unit after the transaction closes.

“Bear Stearns has been buying loans from ECC Capital for over three years and the performance of its loans has been favorable compared with other originators in the marketplace,” Verschleiser added. “Encore has a very strong sales organization, and as part of Bear Stearns Residential Mortage Corporation we will be able to expand Encore Credit’s product mix and improve its pricing and funding costs.”