Amresco Wins Friend, Looks for Buyer


Amresco Corp. had a big week last week as the Dallas-based home equity lender announced the formation of Finance America, LLC, a new venture with Lehman Brothers targeted at bringing Amresco's subprime home equity origination and securitization business back to life.

Lehman is looking to underwrite all Finance America HEL deals going forward. Additionally, amidst another lackluster earnings report released for the 1999 second quarter, Amresco announced that its hunt for a deep-pocketed parent has now focused on one potential buyer.

Amresco Residential Mortgage Corp., Amresco's home-equity lending subsidiary based in Irvine, Calif., will partner with Lehman Brothers to originate, purchase, sell, and securitize subprime home equity ABS going forward, according to officials at both companies.

"It's essentially Amresco's home-equity business," said Finance America's new president and chief operating officer Pete Levasseur of the new venture. But Levasseur said that Lehman will provide warehouse financing, "wet funding," residual financing, and will lead and co-manage all of the new entity's subprime home equity asset-backed securitizations.

He said the relationship is one in which both Amresco and Lehman will have a significant equity share of Finance America. Neither Levasseur nor Lehman would divulge the equity breakdown of the new venture.

Lehman's financing will allow the company to securitize again, said Levasseur, as Amresco has yet to access the market this year.

Its last deal came in September 1998, the third deal during a year in which Amresco issued $1 billion per quarter in HEL paper, as part of its pattern of issuing bonds in the first three quarters of each year.

Levasseur said he and his colleagues have yet to discuss timing and size of new home equity deals, but expects Finance America to tally about $1.3 billion in home equity collateral for 1999. He projects that amount will grow to $1.8 billion in 2000.

Amresco halted home equity securitization when it got pinched in last year's liquidity crisis. In April, it enlisted Goldman, Sachs & Co. to find a buyer for the company. In an earnings release from last week, the company reported 38% in losses on its residential loan business, but was talking with a potential buyer.

Levasseur was formerly president of ARMC. Brian Libman, former managing director at Lehman, will serve as chairman of the board and CEO. - SK