Mego Mortgage Corp., a high-loan-to-value mortgage lender, was battling this week to quell rumors that it may be forced to sell.

The rumors spread after the Atlanta company announced this month that it would have to take a $16 million charge, fueling doubts that it had enough capital to survive. The charge was to pay for faster than expected prepayments.

But Jeffrey Moore, chief executive of Mego, said the company is not about to throw in the towel. "We haven't engaged anyone" to help sell the company, Mr. Moore said, responding to a rumor that it had retained Friedman, Billings, Ramsey Group Inc.

Although it has pulled a 3.5 million-share secondary offering from the market, Mego still has "many opportunities on the table," Mr. Moore said. "The company has what it needs to go forward."

The offering, filed Nov. 12, was withdrawn under the impact of several weeks of bad news for the specialty finance sector. Since the filing, Mego's stock has dropped from above $10 a share to less than $4.

But instead of shopping for a buyer, Mego is concentrating on growth in its business, Mr. Moore said.

It is shifting to a greater reliance on retail and broker originations, Mr. Moore said, because they are more profitable than wholesale lending. The company is also expanding its subprime business, which offers lower-LTV loans to customers who don't qualify for its high-LTV product.

The company is also expanding its referral division, which works with banks and finance companies to offer their customers high-LTV and subprime loans.

Capital constraints are not a problem, Mr. Moore indicated, because of the $15 million in cash and $10 million in saleable loans the company has on hand, he said.

Furthermore, its revised assumptions are among the "most conservative in the industry," he said. The company revised its prepayment assumptions from 13.75% over 24 months to 19% when it took the $16 million charge.

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