Amresco Inc. took a $51 million charge in the third quarter, reflecting its sale of home equity loans and a reevaluation of its commercial mortgage portfolio, the company said last week.

Amresco's net income for the quarter ended Sept. 30 was $758,000. For the same period a year earlier its net income was $15.336 million.

The Dallas-based company's action comes at a tumultuous time for specialty lenders. These companies have been hard hit in recent months as loans prepaid faster than expected, equity investors fled the sector, and the securitization market and wholesale loan sales became less profitable.

Companies that can refrain from securitizing loans are doing so; others are shunning the wholesale businesses entirely.

Amresco previously announced that it had sold off most of its existing home equity loans and canceled plans to buy more, to reduce risk and strengthen liquidity.

The company said it completed the sale of $1 billion of home equity loans Oct. 19 and had a commitment to sell off $400 million more. Amresco also has canceled an arrangement to buy $260 million of these loans.

Some other companies' moves have been even more drastic. This month FirstPlus Financial Group sold off its servicing portfolio and its non-core businesses.

Amresco is "still originating home equity loans," a company spokeswoman said. "This doesn't mean we are getting out of the business," she said.

The company received 100.625% of par for the loans, well below the 105% that home equity loans were fetching earlier this year.

Amresco said it used the cash to repay warehouse debt and that it has closed the hedge positions related to the loans and eliminated any potential for future margin calls.

Loan losses were offset in part by the cash sales of loans through Mortgage Investors Corp., a recently acquired subsidiary, Amresco said. The company also said it had a "substantial increase" in mortgage banking fees, because of record third-quarter origination and transaction volumes.

Assets were $4.8 billion at Sept. 30, up from $2.6 billion on Dec. 31, 1997, Amresco said.

The company's commercial finance originations grew 130% from a year earlier, to $335 million for the quarter.

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