Industry News

American Home projects second-quarter loss

Lender cites defaults on stated-income loans

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Early payment defaults on stated-income loans with high loan-to-value ratios will likely lead to a second-quarter loss for American Home Mortgage Investment Corp., the real estate investment trust said. In a Securities and Exchange Commission filing and press release, the Melville, N.Y.-based lender said it will take "substantial charges" for credit-related expenses in the second quarter, and that it is withdrawing its earning guidance for 2007. Chief Executive Officer Michael Strauss said American Home has stopped originating stated-income loans with high LTV ratios and that the "second quarter will be a period of 'clean-up' as the impact from the discontinued products continues to wind down." Claims reached a high in April, the company said, then declined approximately 53 percent in May and June. Claims and related reserves are expected to continue to trend lower in the third and fourth quarters. American Home originates, services and sells mortgage loans for institutional investo...