Imperial Credit Industries is spinning off its jumbo conduit with an initial stock offering to form a real estate investment trust that will buy and securitize jumbo loans.

The unit, Imperial Credit Mortgage Holdings, Newport Beach, Calif., will function like Fannie Mae and Freddie Mac, buying and securitizing loans. But Imperial will do it with loans that exceed the Fannie and Freddie limit of $203,150.

The unit will gather these nonconforming loans from correspondents and package them into mortgage-backed securities to be sold to investors by Wall Street firms.

Imperial Credit will also provide short-term lines of credit to mortgage banks as a wholesale credit provider.

As a real estate investment trust, the unit will be exempt from paying taxes at the corporate level as long as 95% of its proceeds are paid to stock holders.

Imperial Credit's taxable subsidiary, ICI Funding Corp., will buy nonconforming loans from third-party correspondents and securitize and sell them.

One of the first such spinoffs from an independent mortgage company is CWM Mortgage Holdings, which has ties to Countrywide Credit Industries. CWM is managed and partly owned by Angelo Mozilo and David Loeb, who head Countrywide.

CWM Mortgage Holdings, a jumbo loan conduit, was created in 1985. Although Countrywide owns 3% of CWM, the unit is traded separately.

Michael W. Perry, chief operating officer and executive vice president of CWM, said he does not consider Imperial Credit's proposed conduit to be his competition.

"They are originators," Mr. Perry said of Imperial Credit, "and there is a big difference between originating loans and securitizing them." He said Imperial Credit has never securitized loans, adding the process is difficult without experience and a system set up to do the job.

Mr. Perry said CWM has $320 million in capital, which puts it on the small end of the conduit competition. Imperial Credit, he added, will probably be too small to be considered serious competition.

Companies have tried to spin off conduits, Mr. Perry said, and he expects to see more of it in the future. But he does not think any of these attempts will be competition for CWM, he said.

"It's a different business (from mortgage banking originations) and the margins are low. We are not a retail origination business, and we do not try to be," Mr. Perry said.

Imperial Credit's proposed public offering of 4.6 million common shares is expected to become effective in October. The underwriters of the offering are PaineWebber Inc., Oppenheimer & Co., McDonald & Co. Securities, and Stifel, Nicolaus & Co.

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