AMENDMENT NO. 3 TO REVOLVING CREDIT AND SECURITY AGREEMENT

Exhibit 10.7

AMENDMENT NO. 3 TO

REVOLVING CREDIT AND SECURITY AGREEMENT

This AMENDMENT NO. 3 (the “Amendment”) is made and entered into as of March 1, 2004 by and between Countrywide Warehouse Lending (“Lender”) and Encore Credit Corporation ( “Borrower”). This Amendment amends that certain Revolving Credit and Security Agreement by and between lender and Borrower dated as of May 13, 2002 (as may be amended from time to time, the “Credit Agreement”).

R E C I T A L S

Lender and Borrower have previously entered into the Credit Agreement pursuant to which Lender may, from time to time, provide Borrower credit in the form of a warehouse line secured by residential mortgage loans. Lender and Borrower hereby agree that the Credit Agreement shall be amended as provided herein.

In consideration of the mutual promises contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lender and Borrower hereby agree as follows:

New Section - Secondary Marketing, Underwriting, Third Party Origination and Interest Rate Risk Management Practices. The following new section, numbered Section 10.11 and titled “Secondary Marketing, Underwriting, Third Party Origination and Interest Rate Risk Management Practices,” shall be added to the Credit Agreement:

Borrower shall not, without the prior written approval of Lender, change any secondary marketing, underwriting, third party origination and interest rate risk management practices of Borrower that exist as of the date hereof. The fact that Borrower may from time to time disclose to Lender in writing proposed changes in such practices after the date hereof shall not be deemed Lender’s consent to or written approval thereof unless a duly authorized Lender has indicated written approval of such changes and it shall be deemed an Event of Default if Borrower has failed to obtain such written approval prior to implementation of such changes.

2. No Other Amendments. Other than as expressly modified and amended herein, the Credit Agreement shall remain in full force and effect and nothing herein shall affect the rights and remedies of Lender as provided under the Credit Agreement.

3. Capitalized Terms. Any capitalized term used herein and not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement.

4. Facsimiles: Facsimile signatures shall be deemed valid and binding to the same extent as the original.

IN WITNESS WHEREOF, Lender and Borrower have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first written above.

COUNTRYWIDE WAREHOUSE LENDING						Encore Credit Corporation
By:						By:		/s/ Xxx Xxxxxx
		Signature						Signature
Name:						Name:		Xxx Xxxxxx
Title:						Title:		EVP/Secretary