Accredited Home Lenders Holding Co

Accredited Home Lenders Holding Co. reported a fourth-quarter loss three times larger than Wall Street expected, hurt by rising delinquencies and costs to integrate another sub-prime lender it bought in October. San Diego-based Accredited also said it was willing to lose market share rather than compete aggressively for loans that were more likely to default. Accredited lost $37.8 million, or $1.49 a share, compared with a profit of $43.3 million, or $1.96, a year earlier.

New Century Financial Corp. and Ameriquest Mortgage Co., both based in Orange County, are among five sub-prime mortgage lenders that may have the ratings cut on the part of their businesses that collect home loan payments amid a rise in delinquencies, Moody's Investors Service said Wednesday. Moody's said it would review the so-called servicer ratings for affiliates or units of New Century, Ameriquest, NovaStar Financial Inc., Accredited Home Lenders Holdings Co. and Winter Group.

The struggling sub-prime mortgage industry was hit with more layoffs Tuesday, but at least one lender received an assist that could help it keep the lights on. Accredited Home Lenders Holding Co. of San Diego said it had received a $200-million loan from Farallon Capital Management, a San Francisco-based hedge fund. The loan gives Accredited, the 15th-largest sub-prime lender in 2006, a financial cushion -- allowing it to pay creditors and to keep making loans.

First they were cut off by their Wall Street investment partners. Now, their auditors are giving them the heave-ho. In what amounts to a vote of no-confidence, the Grant Thornton accounting firm has resigned as outside auditor to two major sub-prime lenders -- Fremont General Corp. of Santa Monica and Accredited Home Lenders Holding Co. of San Diego.

Accredited Home Lenders Holding Co., which had dodged the shutdowns and takeovers that gradually wiped out independent rivals in the sub-prime mortgage business this year, joined the list Monday by agreeing to sell itself to a Dallas-based private equity fund. San Diego-based Accredited had been viewed as one of the best-managed specialists in loans to risky borrowers.

Accredited Home Lenders Holding Co. has sued private equity firm Lone Star Funds to force it to complete a $400-million takeover of the unprofitable sub-prime mortgage lender. Shares of Accredited tumbled $3.09, or 35%, to $5.82 on Monday after Lone Star said late Friday that it would not go through with its $15.10-a-share buyout, citing a "drastic deterioration in the financial and operational condition of the company."

Accredited Home Lenders Holding Co. rejected a private equity firm's attempt to lower its price to buy the sub-prime mortgage lender, saying Friday that it would continue a lawsuit aimed at closing the deal. Lone Star Funds had agreed in June to pay $15.10 a share, or $400 million, for Accredited. Late Thursday, Lone Star said it wanted to pay $8.50 a share. In exchange, Lone Star offered to let Accredited seek other buyers.

Shares of Accredited Home Lenders Holding Co. soared 18% on Wednesday after the San Diego-based sub-prime mortgage company reached a $296-million agreement to be acquired by private equity firm Lone Star Funds, replacing a higher-priced deal that collapsed last month. Dallas-based Lone Star agreed to pay $11.75 a share for Accredited. The price is less than the $15.10 that the buyout firm agreed to pay in June but is higher than Lone Star's revised offer three weeks ago of $8.50.

In deal that may foreshadow a wave of consolidation among home lenders, the parent of Aames Home Loans said Thursday that it was being acquired by Accredited Home Lenders Holding Co. for $340 million in stock and cash. Aames Investment Corp., a 50-year-old Los Angeles fixture, and Accredited, a San Diego firm founded in 1990, specialize in loans to risky borrowers, charging higher interest and fees to compensate.