News that Accredited Home Lenders Holding Co. would sell its inventory of subprime mortgage loans sent shares climbing.
The San Diego-based company announced today it would sell almost all of its originations held for sale that are funded by its warehouse and repurchase credit facilities, asset-backed commercial paper facility and equity.
The buyer was not disclosed.
"The $2.7 billion of loans held for sale will be sold at a substantial discount in order to alleviate recent pressures from margin calls," the statement said. Around $120 million in recently-originated loans will remain on its warehouse lines.
The deal includes a $40 million holdback reserve for early-payment defaults with no further liability, Accredited said. A pretax charge of around $150 million was estimated on the sale -- which will enable the lender to fully explore strategic options. The company is still seeking waivers and extensions of covenants it has defaulted on.
Accredited also disclosed it will write off all of the $130 million from Aames Investment Corp., reflecting the charge in the fourth quarter 2006.
Shares of Accredited, which trade under the symbol LEND, were up $2.17 near midday to $11.60.
Accredited Home Lenders Holding Co. announced it is taking drastic measures to shore up its cash position.