Document:

EX-10.5

AMENDMENT TO EMPLOYMENT AGREEMENT

This Amendment to Employment Agreement (“Amendment”) is made and entered into as of October
10, 2006 (the “Effective Date”) by and between ECC Capital Corporation (the “Company”) and Roque A.
Santi (“Executive”).

WHEREAS, Executive is currently employed by the Company pursuant to a written employment
agreement dated as February 14, 2005 (the “Employment Agreement”);

WHEREAS, Executive and the Company wish to modify the terms of the Employment Agreement;

THEREFORE, the parties agree as follows:

1. Section 3.1 of the Employment Agreement shall be modified so that it reads as follows:

3.1. Base Compensation. Executive shall be paid a salary at
the annual rate of $200,000 (the “Base Compensation”). The Base
Compensation shall be reviewed at least annually. In the event that
the Base Compensation is increased, the new salary shall be the Base
Compensation for purposes of this Agreement thereafter.

2. Section 4.4 of the Employment Agreement is hereby amended by inserting the following
sentence as the last sentence thereto:

Executive’s vacation pay shall be calculated based upon an annual salary of
$250,000, which was Executive’s Base Compensation for all purposes prior to this
Amendment.

3. Section 5.7(a) of the Employment Agreement is hereby amended by inserting the following
sentence as the lead-in sentence thereto:

“Solely for purposes of determining the Severance Amount under this Section
5.7(a), Base Compensation shall mean $250,000, which was Executive’s Base
Compensation for all purposes prior to this Amendment.”

4. Executive agrees that this Amendment to Employment Agreement shall not: (a) be deemed a
breach of the Employment Agreement, including Section 3.1 thereof; (b) constitute Good Reason
within the meaning of Section 5.6 of the Employment Agreement for Executive to terminate his
employment; and (c) entitle Executive to the Severance Payments, Vesting, and/or Severance Benefits
under the Employment Agreement.

5. Any capitalized terms in this Amendment to Employment Agreement that are not defined herein
shall have the same meaning as set forth in the Employment Agreement.

6. Except as expressly set forth above, this Amendment to Employment Agreement shall not
amend, supersede or otherwise modify any provision of the Employment Agreement.

ECC CAPITAL CORPORATION,

a Maryland corporation

	 	 	 
	By:____________________________________

	Name:

Its:

	 	Steven G. Holder

Chairman and Co-Chief Executive Officer

Date:     

EXECUTIVE

     

Roque A. Santi

Date:EX-10.6

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of October 10, 2006 (the
“Effective Date”) by and between ECC Capital Corporation (the “Company”) and Larry Moretti
(“Executive”).

WHEREAS, Executive is currently employed by Encore Credit Corp., a wholly owned subsidiary of
the Company (“Encore”); and

WHEREAS, the Company and Executive desire to enter into this Agreement in order to specify the
terms of Executive’s employment by Encore.

THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

1. EMPLOYMENT

The Company hereby employs Executive and Executive hereby accepts employment upon the terms
and conditions set forth below.

2. TERM

2.1 Term. The term of this Agreement shall commence on October 10, 2006 the
(“Effective Date”), and shall continue on the terms and conditions set forth below, until
Executive’s employment is terminated as provided in Section 5 (the “Term”).

3. COMPENSATION

3.1 Base Compensation. Executive shall be paid a salary at the annual rate of
$200,000 (the “Base Compensation”). The Base Compensation shall be reviewed at least annually, and
may be increased or decreased. In the event that the Base Compensation is increased, the new
salary shall be the Base Compensation for purposes of this Agreement thereafter.

3.2 Bonus Compensation. The Compensation Committee of the Board of Directors of the
Company (the “Compensation Committee”), or its designee, shall review Executive’s performance on an
annual basis and cause the Company to award Executive a cash bonus in an amount which the
Compensation Committee or its designee determines in its sole and absolute discretion.

3.3  Benefits. The Executive shall be entitled to participate in all pension, 401(k)
and other employee plans and benefits in accordance with the terms of such plans or policies as may
be in effect from time to time.

3.4 Automobile Allowance. The Company shall provide Executive with one (1) automobile
allowance not to exceed $2000 per month during the term of Executive’s employment hereunder.

3.6 Method of Payment. The monetary compensation payable and any benefits due to
Executive hereunder may be paid or provided in whole or in part, from time to time, by the Company
and/or its respective parents, subsidiaries and affiliates, but shall at all times remain the
responsibility of the Company.

4. POSITION AND DUTIES

4.1 Position or Duties. Executive shall hold such position and have such duties as
assigned to him by the Company from time to time.

4.2 Devotion of Time and Effort. Executive shall use Executive’s good faith best
efforts and judgment in performing Executive’s duties as required hereunder and to act in the best
interests of the Company. Executive shall devote all of his business time, attention and energies
to the business of the Company.

4.3 Other Activities. Executive may engage in other activities for Executive’s own
account while employed hereunder, including without limitation, charitable, community and other
business activities, provided that in the judgment of the Board of Directors of the Company (the
“Board”) such other activities do not materially interfere with the performance of Executive’s
duties hereunder, and do not violate Sections 6 and 7.

4.4 Vacation. Executive shall be entitled to two (2) weeks paid vacation annually.
Such vacation shall be subject to the Company’s policies concerning accrual, use and scheduling of
vacation, as such policies may be in effect from time to time. Executive’s vacation pay shall be
calculated based upon an annual salary of $250,000, which was Executive’s Base Compensation for all
purposes prior to this Agreement.

4.5 Business Expenses. Executive shall be entitled to reimbursement of reasonable
business expenses in accordance with Company policies, as they may be in effect from time to time.

5. TERMINATION

5.1 Due to Death. Executive’s employment shall terminate as of the date of his death.

5.2 Due to Disability. The Company may terminate Executive’s employment if he becomes
“disabled”, as defined below, upon written notice to Executive. For purposes of this Agreement,
the term “Disability” shall mean a physical or mental incapacity as a result of which Executive
becomes unable to continue to perform the essential functions of the job with or without
accommodation hereunder for six (6) consecutive calendar months or for shorter periods aggregating
180 business days in any 12 month period, or, if this provision is inconsistent with any applicable
law, to the extent not prohibited by law.

5.3 By the Company Without “Cause”. The Company may terminate Executive’s employment
without “Cause” as defined in Section 5.5 below at any time following the Effective Date, upon
written notice to Executive.

5.4 By Executive Without “Good Reason”. Executive may terminate his employment
hereunder without Good Reason, as defined in Section 5.6 below, at any time upon written notice to
the Company.

5.5 By The Company For Cause. The Company may terminate Executive’s employment for
“Cause” at any time, upon written notice to Executive. For purposes of this Agreement, “Cause”
shall mean:

(a) Executive’s conviction of or plea of nolo contender to a felony or any crime involving
moral turpitude;

(b) Executive’s commission of any act of theft, embezzlement or misappropriation against the
Company;

(c) Executive’s failure to substantially perform Executive’s duties hereunder (other than such
failure resulting from Executive’s incapacity due to physical or mental illness), which failure is
not remedied within thirty (30) days after written demand for substantial performance is delivered
by the Company which specifically identifies the manner in which the Company believes that
Executive has not substantially performed Executive’s duties; or

(d) Executive’s material breach of his obligations under this Agreement, which breach is not
remedied within thirty (30) days after written notice is delivered by the Company which
specifically identifies the breach that the Company believes has occurred.

5.6 By Executive For Good Reason. Executive may terminate his employment for good
reason upon at least thirty (30) days prior written notice to the Company. For purposes of this
Agreement, “Good Reason” shall mean the Company’s material breach of the salary and benefit
obligations hereunder and either such breach is incurable or, if curable, has not been cured within
fifteen (15) days following receipt of written notice by Executive to the Company of such breach by
the Company. Executive shall be deemed to have waived Executive’s right to terminate for “good
reason” with respect to a breach if Executive does not notify the Company in writing of such breach
within fifteen (15) days of such breach, or, if such breach is not immediately known to him, and
could not reasonably be expected to be know by him, within fifteen (15) days of his discovery of
such breach. Following a Change in Control, as defined below, “Good Reason” shall also mean: (a) a
material reduction in the authority of Executive; (b) Executive’s assignment to a position other
than an officer position with the Company and any of its subsidiaries; or (c) a relocation of
Executive’s primary office location outside of Orange County, California, without Executive’s prior
written consent. The fact that the Company becomes a subsidiary of another entity, or that the
Company’s status changes from publicly-traded to privately-held, as a result of the Change in
Control, shall not, by itself, constitute a material reduction in the authority of Executive. In
addition, provided that Executive remains employed by the Company for ninety (90) days following a
Change in Control, during the thirty (30) days following the ninety (90) day period after the
Change in Control, if Executive elects to terminate his employment with the Company for any reason
or no reason, he shall be deemed to have “Good Reason”.

5.7 Severance Payment. Solely for purposes of determining the Severance Amount
under this Section 5.7(a), Base Compensation shall mean $250,000, which was Executive’s Base
Compensation for all purposes prior to this Agreement. In the event Executive’s employment
terminates pursuant to Sections 5.1 (Death), 5.4 (Without Good Reason), or 5.5 (For Cause),
Executive (or Executive’s estate, as applicable) shall have the right to receive Executive’s
compensation as otherwise provided under this Agreement through the effective date of termination.
Executive shall have no further right to receive compensation, benefits or other consideration from
the Company, and Executive shall not be entitled to any severance payments or benefits, except as
required by applicable law. In the event that Executive’s employment is terminated pursuant to
Section 5.2 (Due to Disability), Section 5.3 (Without Cause), or Section 5.6 (For Good Reason),
Executive shall continue to render services to the Company pursuant to this Agreement until the
date of termination and shall continue to receive compensation, as provided in this Agreement,
through the termination date. Thereafter, Executive shall be entitled to severance pay and
benefits as set forth in subparagraph (a) through (c) below, provided that Executive executes and
delivers (and does not revoke, if a revocation period is required by law) a general release of
claims in a form acceptable to the Company in its sole and absolute discretion, and is not in
material breach of any of the provisions of this Agreement.

(a) Amount. The Company shall pay Executive an amount equal to 200 percent of
Executive’s Base Compensation (collectively, the “Severance Amount”). The Severance Amount shall
be subject to withholding under applicable law. The Severance Amount will be paid as follows: no
later than the tenth (10th) business day after Executive delivers a signed general
release in the form acceptable to the Company and returns all Company property as required in
Section 9.9, twenty-five (25) percent of the Severance Amount shall be paid to Executive; the
remaining seventy-five (75) percent of the Severance Amount shall be paid in substantially equal
sums over the following twelve (12) months, in accordance with the Company’s regular payroll
practices (the “Severance Payments”). Notwithstanding the foregoing, the Severance Payments shall
be delayed to the extent necessary to comply with Section 409A of the Internal Revenue Code.

(b) Vesting. In addition to the Severance Payments, any unvested stock options or
restricted stock held by Executive shall vest as follows: 1/12th of the unvested stock
options and/or restricted stock held by Executive as of the termination date shall vest at the end
of each one-month period following the date of termination for the twelve-month period following
the date of termination (the “Vesting”). Any stock option or restricted stock vested in accordance
with this Section 5.7(b) shall be exercisable within ninety (90) days following the twelve-month
vesting period

(c) Benefits. In addition to the Severance Payments and the Vesting, provided that
Executive is eligible for and timely elects COBRA healthcare coverage continuation, the Company
shall pay the portion of the COBRA premium equal to the difference between the COBRA premium and
Executive’s monthly contribution towards health care benefits immediately prior to the date of
termination, for Executive to continue his (and, if applicable, his family’s) health care coverage,
which was in effect as of the date of termination for up to eighteen (18) months from the date of
termination, provided that Executive (and, if applicable, his family) remains eligible for such
coverage (the “Severance Benefits”). Notwithstanding the foregoing, the Company’s payment of
portions of the COBRA premium shall be delayed to the extent necessary to comply with Section 409A
of the Internal Revenue Code.

5.8 Change in Control.

For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the
following events:

(a) within twenty-four (24) months of the Effective Date, the individuals constituting the
Board as of the Effective Date (the “Incumbent Board”) cease for any reason to constitute at least
two-thirds (2/3rds) of the Board; provided, however, that if the election, or nomination for
election by the Company’s stockholders, of any new director was approved by a vote of at least
two-thirds (2/3rds) of the Incumbent Board, such new director shall be considered a member of the
Incumbent Board; or

(b) an acquisition of any voting securities of the Company (the “Voting Securities”) by any
“person” (as the term “person” is used for purposes of Section 13(d) or Section 14(d) of the
Securities Exchange Act of 1934, as amended (the “1934 Act”)) immediately after which such person
has “beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act)
(“Beneficial Ownership”) of 35% or more of the combined voting power of the Company’s then
outstanding Voting Securities; or

(c) approval by the stockholders of the Company of:

(i) a merger, consolidation, share exchange or reorganization involving the Company, unless

(A) the stockholders of the Company, immediately before such merger,
consolidation, share exchange or reorganization, own, directly or indirectly
immediately following such merger, consolidation, share exchange or reorganization,
at least 80% of the combined voting power of the outstanding voting securities of
the corporation that is the successor in such merger, consolidation, share exchange
or reorganization (the “Surviving Company”) in substantially the same proportion as
their ownership of the Voting Securities immediately before such merger,
consolidation, share exchange or reorganization; provided, however, that a merger,
consolidation, share exchange or reorganization of the Company shall not constitute
a “change in control” if such merger, consolidation, share exchange or
reorganization of the Company is approved by the Board and is recommended by
Executive to the Board for its approval; and

(B) the individuals who were members of the Incumbent Board immediately prior
to the execution of the agreement providing for such merger, consolidation, share
exchange or reorganization constitute at least two-thirds (2/3rds) of the members of
the board of directors of the Surviving Company; or

(ii) a complete liquidation or dissolution of the Company; or

(iii) an agreement for the sale or other disposition of all or substantially all of the assets
of the Company.

5.9 Certain Additional Payments.

(a) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment would be subject to the Excise Tax, then the
Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount
equal to the Excise Tax imposed upon the Payments, but not any Excise Tax resulting from the
receipt of any Gross-Up Payment.

(b) Subject to the provisions of Section 5.9(c), all determinations required to be made under
this Section 5.9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by the nationally recognized certified public accounting firm used by the Company immediately
prior to the Change in Control or, if such firm declines to serve, such other nationally recognized
certified public accounting firm as may be designated by the Executive (the “Accounting Firm”)
which shall provide detailed supporting calculations both to the Company and the Executive within
fifteen (15) business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Subject to Section 5.9(e) below, any
Gross-Up Payment, as determined pursuant to this Section 5.9, shall be paid by the Company to the
Executive within five (5) days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive. For
purposes of making the calculations required by this Section 5.9, the Accounting Firm may make
reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable,
good-faith interpretations concerning the application of Sections 280G and 4999 of the Internal
Revenue Code (the “Code”). As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 5.9(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive.

(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten (10) business days
after the Executive is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to contest such claim, the Executive shall:

(i) give the Company any information reasonably requested by the Company relating to such
claim,

(ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,

(iii) cooperate with the Company in good faith in order effectively to contest such claim, and

(iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 5.9(c), the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 5.9(c), the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company’s complying with the requirements of Section 5.9(c))
promptly pay to the Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5.9(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the expiration of
thirty (30) days after such determination, then such advance shall be forgiven and shall not be
required to be repaid in an amount equal to the Gross-Up Payment that the Company would otherwise
be required to pay, and the balance of the amount advance shall be repaid to the Company by
Executive within sixty (60) days of such determination.

(e) Notwithstanding any other provision of this Section 5.9, the Company may withhold and pay
over to the Internal Revenue Service for the benefit of the Executive all or any portion of the
Gross-Up Payment that it determines in good faith that it is or may be in the future required to
withhold, and the Executive hereby consents to such withholding.

(f) Notwithstanding the foregoing, if the net amount Executive would realize from any Payment
and any Gross-Up Payment after payment of all income, employment and excise taxes on such Payments
and such Gross-Up Payment would be less than the net amount Executive would realize if all Payments
were limited to the maximum amount that may be paid to Executive without any portion thereof being
an “excess parachute payment” under Section 280G of the Code, then Executive’s payments and
benefits under the Agreement, (and under all other contracts, arrangements, and programs) shall
not, in the aggregate, exceed the maximum amount that may be paid to Executive without any portion
thereof being an “excess parachute payment” under Section 280G of the Code, as determined in good
faith by the Accounting Firm. The Company shall bear the expense of the Accounting Firm’s
determination. If Executive’s payments and benefits must be reduced to avoid any portion thereof
being an “excess parachute payment,” Executive’s payments and benefits shall be reduced in the
priority order Executive designates or, if Executive fails promptly to designate an order, in the
priority order designated by the Company. If an amount in excess of the limit set forth in this
Section is paid to Executive, Executive shall repay the excess amount to the Company upon demand,
with interest at the rate provided in Section 1274(b)(2)(B) of the Code. Executive and the Company
agree to cooperate with each other reasonably in connection with any administrative or judicial
proceedings concerning the existence of payments and benefits (or portions thereof) that are
“excess parachute payments” and the amounts thereof.

(g) Definitions. The following terms shall have the following meanings for purposes
of this Section 5.9.

(i) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.

(ii) A “Payment” shall mean any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the
Executive, whether paid or payable pursuant to this Agreement or otherwise.

5.10 Vesting Upon Change in Control.

Notwithstanding the provisions of any plan or agreement to the contrary, upon a Change in
Control, all unvested stock options held by Executive shall be fully vested and exercisable, and
all restricted stock held by Executive shall be fully vested. Except as expressly set forth in
this Section 5.10, such stock options and restricted stock shall be subject to the terms of the
plans and agreements under which they were issued.

6. CONFIDENTIALITY

During the Term, Executive will have access to and become acquainted with various information
relating to the Company’s business operations, including customer (meaning a broker or borrower)
lists, customer files, marketing data, business plans, strategies, employee lists, contracts,
financial records and accounts, projections and budgets, and similar information. Executive agrees
that to the extent such information is not generally known to or available to the public and/or the
industry, and gives the Company an advantage over competitors who do not know of or use such
information, such information and documents constitute “Confidential Information” of the Company.
Executive further agrees that any documents relating to the business of the Company, whether they
are prepared by Executive or come into Executive’s possession in any other way, are owned by the
Company, shall remain the exclusive property of the Company, and must be returned to the Company
upon termination of employment. Executive shall not use any Confidential Information of the
Company, directly or indirectly, for Executive’s own benefit, or the benefit of any person or
entity other than the Company, nor shall Executive disclose Confidential Information to any person
or entity other than the Company and its employees, either during the Term or at any time
thereafter, except as may be appropriate for Executive to perform his duties as an employee,
officer and/or director, directly or indirectly, of the Company. In the event Executive violates
this provision during any period in which he is receiving severance under Section 5.7 of this
Agreement, in addition to any other remedies the Company may have, the Company may terminate the
Severance Payments, Vesting and Severance Benefits under Section 5.7.

7. NON-SOLICITATION/NON-COMPETITION

7.1 Non-Solicitation. During the Term and for the twelve-month period following the
Term, Executive shall not solicit any of the Company’s employees, agents or independent contractors
to end their relationship with the Company, or solicit or otherwise induce any such person to
perform services for Executive, or any other person or entity. In the event Executive violates
this provision during any period in which he is receiving severance under Section 5.7 of this
Agreement, in addition to any other remedies the Company may have, the Company may terminate the
Severance Payments, Vesting and Severance Benefits under Section 5.7.

7.2 Non-Competition. Executive acknowledges that Encore does business throughout the
United States, and that Executive has access to Confidential Information of the Company in the
course of performing his duties under this Agreement. In order to protect the legitimate business
interests of the Company and to avoid misuse of its Confidential Information, during the Term, and
(i) if Executive’s employment terminates pursuant to Section 5.4 or 5.5, or (ii) if Executive’s
employment terminates pursuant to Section 5.2, 5.3 or 5.6 and Executive is receiving severance
under Section 5.7 of this Agreement, for the one-year period after the Term, Executive shall not,
directly or indirectly, serve as an employee, consultant, officer, director, lender, investor,
shareholder, partner, manager or member of any person or entity, or own or act as a sole proprietor
of a business that engages in subprime wholesale mortgage lending during that period in any County
of the State of California or any of the States of the United States of America, other than the
Company or its affiliates, or as approved in advance in writing by the Board; provided, however,
that ownership of less than one (1) percent of the publicly traded securities of any publicly
traded entity shall not violate this provision. In the event Executive violates this provision
during any period in which he is receiving severance under Section 5.7 of this Agreement, in
addition to any other remedies the Company may have, the Company may terminate the Severance
Payments, Vesting and Severance Benefits under Section 5.7.

8. ARBITRATION AGREEMENT

8.1 Claims Subject to Arbitration. Any controversy, dispute or claim between
Executive and the Company, or its parents, subsidiaries, affiliates and any of their officers,
directors, agents or other employees, shall be resolved by binding arbitration, at the request of
either party.

The arbitrability of any controversy, dispute or claim under this policy shall be determined
by application of the substantive provisions of the Federal Arbitration Act (9 U.S.C. sections 1
and 2) and by application of the procedural provisions of the California Arbitration Act, except as
provided herein. Arbitration shall be the exclusive method for resolving any dispute and all
remedies available from a court of competent jurisdiction shall be available; provided, however,
that either party may request provisional relief from a court of competent jurisdiction, as
provided in California Code of Civil Procedure Section 1281.8, if such relief is not available in a
timely fashion through arbitration.

The claims which are to be arbitrated include, but are not limited to any Claim arising out of
or relating to this Agreement or the employment relationship between Executive and the Company,
claims for wages and other compensation, claims for breach of contract (express or implied), claims
for violation of public policy, wrongful termination, tort claims, claims for unlawful
discrimination and/or harassment (including, but not limited to, race, religious creed, color,
national origin, ancestry, physical disability, mental disability, gender identity or expression,
medical condition, marital status, age, pregnancy, sex or sexual orientation) to the extent allowed
by law, and claims for violation of any federal, state, or other government law, statute,
regulation, or ordinance, except for claims for workers’ compensation and unemployment insurance
benefits. This Agreement shall not be interpreted to provide for arbitration of any dispute that
does not constitute a claim recognized under applicable law.

8.2 Selection of Arbitrator. The Executive and the Company will select a single
neutral arbitrator by mutual agreement. If the Executive and the Company are unable to agree on a
neutral arbitrator within thirty (30) days of a demand for arbitration, either party may elect to
obtain a list of arbitrators from the Judicial Arbitration and Mediation Service (“AMS”) or the
American Arbitration Association (“AAA”), and the arbitrator shall be selected by alternate
striking of names from the list until a single arbitrator remains. The party initiating the
arbitration shall be the first to strike a name.

8.3 Demand for Arbitration. The demand for arbitration must be in writing and must be
made by the aggrieved party within the statute of limitations period provided under applicable
State and/or Federal law for the particular claim(s). Failure to make a written demand within the
applicable statutory period constitutes a waiver of the right to assert that claim in any forum.

8.4 Location of Arbitration. Arbitration proceedings will be held in Orange County,
California.

8.5 Choice of Law. The arbitrator shall apply applicable State and/or Federal
substantive law to determine issues of liability and damages regarding all claims to be arbitrated,
and shall apply the California Evidence Code to the proceeding.

8.6 Discovery. The parties shall be entitled to conduct reasonable discovery and the
arbitrator shall have the authority to determine what constitutes reasonable discovery. The
arbitrator shall hear motions for summary judgment/adjudication as provided in the California Code
of Civil Procedure.

8.7 Written Opinion and Award. Within thirty days following the hearing and the
submission of the matter to the arbitrator, the arbitrator shall issue a written opinion and award
which shall be signed and dated. The arbitrator’s award shall decide all issues submitted by the
parties, and the arbitrator may not decide any issue not submitted. The opinion and award shall
include factual findings and the reasons upon which the decision is based. The arbitrator shall be
permitted to award only those remedies in law or equity which are requested by the parties and
allowed by law.

8.8 Appeals. The final award may be appealed to another arbitrator who will be chosen
by the parties in the same manner as the original arbitrator. All the rules governing judicial
appeals of judgments from the Superior Court of the State of California shall apply to any appeal
of this award, including but not limited to the time frames, deadlines and the standards of review.

8.9 Costs of Arbitration. The cost of the arbitrator and other incidental costs of
arbitration that would not be incurred in a court proceeding shall be borne by the Company. The
parties shall each bear their own costs and attorneys’ fees in any arbitration proceeding,
provided, however, that the arbitrator shall have the authority to require either party to pay the
costs and attorneys’ fees of the other party to the extent permitted under applicable federal or
state law, as a part of any remedy that may be ordered.

8.10 Waiver of Right to Jury. Both the Company and Executive understands that by
using arbitration to resolve disputes they are giving up any right that they may have to a judge or
jury trial with regard to all issues concerning employment or otherwise covered by this Section 8.

9. GENERAL PROVISIONS

9.1 Assignment; Binding Effect. Neither the Company nor Executive may assign,
delegate or otherwise transfer this Agreement or any of their respective rights or obligations
hereunder without the prior written consent of the other party; provided, however, that the Company
may assign its rights and obligations under this Agreement for ECC Capital Corp. without the prior
written consent of Executive. Any attempted prohibited assignment or delegation shall be void.
This Agreement shall be binding upon and inure to the benefit of any permitted successors or
assigns of the parties and the heirs, executors, administrators and/or personal representatives of
Executive.

9.2 Notices. All notices, requests, demands and other communications that are
required or may be given under this Agreement shall be in writing and shall be deemed to have been
duly given when received if personally delivered; when transmitted if transmitted by telecopy,
electronic or digital transmission method with electronic confirmation of receipt; the day after it
is sent, if sent for next-day delivery to a domestic address by recognized overnight delivery
service (e.g., FedEx); and upon receipt, if sent by certified or registered mail, return receipt
requested. In each case notice shall be sent to:

	 	 	 
	If to the Company:

	 	ECC Capital Corporation

1833 Alton Parkway

Irvine, California 92606

Attention: Chairman, Compensation Committee

Phone: (949) 856-4848

Fax: (949) 856-4948
	 
	 	 
	If to Executive:

	 	Larry Moretti

1833 Alton Parkway

Irvine, California 92606

Phone: (949) 856-8300

Any party may change its address for the purpose of this Section 9.2 by giving the other party
written notice of its new address in the manner set forth above.

9.3 Entire Agreement. This Agreement constitutes the entire agreement of the Parties
with respect to the subject matter hereof, and supersedes all prior agreements; provided, however,
that this Agreement shall supplement, not supercede, any prior agreements concerning the
Confidential Information, Trade Secrets or other intellectual property of the Company, and any
conflicts or inconsistencies between such agreements shall be resolved so that the provision
providing greater rights to the Company shall prevail.

9.4 Amendments; Waivers. This Agreement may be amended or modified, and any of the
terms and covenants may be waived, only by a written instrument executed by the parties hereto, or,
in the case of a waiver, by the party waiving compliance. Any waiver by any party in any one or
more instances of any term or covenant contained in this Agreement shall neither be deemed to be
nor construed as a further or continuing waiver of any such term or covenant of this Agreement.

9.5 Provisions Severable. In case any one or more provisions of this Agreement shall
be invalid, illegal or unenforceable, in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not, in any way, be affected or impaired thereby.
If any provision hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements contained herein
for too great a period of time or over too great a geographical area, or being too extensive in any
other respect, such provision shall be interpreted to extend only over the maximum period of time
and geographical area, and to the maximum extent in all other respects, as to which it is valid and
enforceable, all as determined by such court in such action.

9.6 Attorney’s Fees. If any legal action, arbitration or other proceeding, is brought
for the enforcement of this Agreement, or because of an alleged dispute, breach or default in
connection with any of the provisions of this Agreement, each of the parties hereto shall be
responsible for payment of their own attorneys’ fees and other costs incurred by them in that
action or proceeding, without regard to whomever is the prevailing party in such action or
proceeding with respect to such claims, except as otherwise provided in Section 8.

9.7 Governing Law. This Agreement shall be construed, performed and enforced in
accordance with, and governed by the laws of the State of California without giving effect to the
principles of conflict of laws thereof.

9.8 Non-Disparagement. During his employment and thereafter, Executive agrees to
represent the Company in a positive light and not to disparage or in any other way communicate to
any person or entity any negative information or opinion concerning the Company, its parents,
subsidiaries and affiliates, or any of their partners, members, shareholders, officers, directors,
employees or agents, or any of them. This provision shall not prohibit Executive from making any
statements or taking any actions required by law, or reporting any actions or inactions Executive
believes to be unlawful. This provision shall not be interpreted to require or encourage Executive
to make any misrepresentations.

9.9 Return of Property. Upon termination of Executive’s employment, Executive shall
return to the Company any and all Company property, materials, or equipment in his possession,
including, without limitation, Company property described in Section 6.

9.10 Cooperation. During Executive’s employment with the Company and thereafter,
Executive agrees to cooperate with Employer and Employer’s agents, accountants and attorneys
concerning any matter with which Executive was involved during his employment. Such cooperation
shall include, but not be limited to, providing information to, meeting with and reviewing
documents provided by Employer and Employer’s agents, accountants and attorneys during normal
business hours or other mutually agreeable hours upon reasonable notice and to make himself
available for depositions and hearings, if necessary and upon reasonable notice. If Executive’s
cooperation is required after the termination of Executive’s employment, the Company shall
reimburse Executive for any out of pocket expenses incurred in and any wages lost by Executive for
time spent performing his obligations hereunder.

9.11 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which shall constitute the same instrument.

9.12 Headings. The headings contained in this Agreement are provided solely for the
Parties’ convenience and shall not be deemed to alter the meaning of the text of the Agreement.

9.13 Survival. Sections 6, 7, 8, and 9 shall survive the termination of this
Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date
first written above.

	 	 	 	 	 
	THE COMPANY:
	 	 	 	 
	 
	 	 	 	 
	ECC Capital Corporation, a
Maryland corporation
By:_________________________________
Name: Steven G. Holder
Its: Chairman and Co-CEO
	 	 	—	 
	EXECUTIVE:
	 	Date

	—
	 	 	—	 
	__________________________________
	 	Date

	Larry Moretti

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