Hanover Capital Sees Loss, May Consider Sale of Subsidiary.(Hanover Capital Mortgage Holdings Inc., REIT)(Brief article)

EDISON, NJ -- Hanover Capital Mortgage Holdings reported a net loss of $700,000, or $0.08 per share, in the first quarter of 2006, citing lower operating income in the company's real estate investment trust segment.

The company also said it has hired Stifel Nicolaus & Co. to review strategic options for its non-REIT subsidiary, including a possible sale.

The company said the REIT's decline in operating income was the result of lower gain on sale related to mortgage assets. In the first quarter of 2005, Hanover Capital achieved $2.3 million in gain-on-sale income from mortgages, compared to a slight loss in the first quarter of this year.

President and CEO John Burchett said in the company's earnings release that Hanover's focus on growing the portfolio, as well as market conditions, have diminished gain-on-sale income.

"The portfolio of subordinate mortgage-backed securities continues to grow and perform well. The carry value of $126.2 million at the end of the first quarter 2006 represents an increase of over $19 million in carry value from the year-end 2005 and an increase of $59.8 million over the balance as of March ...