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 investors. At $16.7 billion, first-quarter loan originations were up 27.2 percent from the same period a year before, the lender said in its most recent quarterly report.

Net income for the quarter was down 43.7 percent from a year ago, however, to $30.7 million. The decrease was attributed to a $45.1 million reduction in gains on sales of mortgage loans and a $12.7 million decrease in gains on mortgage-backed securities compared to a year ago.

The first-quarter gain on sale of mortgage loans originated by the company totaled $126.8 million, down from $171.9 million in the same period a year ago. The decrease was driven by a $61 million increase in credit-related charges and lower margins due to “lower demand for and significant price deterioration on loans we sell in the secondary market,” the company said.

American Home held $6 billion in loans for investment and $4.9 billion for sale at the end of the quarter, compared with $6.3 billion held for investment and $1.5 billion for sale at the same time last year.

In addition to originating loans through a network of loan production offices, the REIT purchases loans from correspondent lenders, and services loans for others at a servicing center in Irving, Texas.

At the end of the first quarter, American Home was servicing $50.4 billion in loans for itself and others, up from $34.8 billion at the same time a year ago. For the quarter, American Home grew net income from loan servicing by $14.3 million from the first quarter of 2006.

To originate loans, American Home draws against either a $3.3 billion commercial paper program or warehouse facilities with UBS Real Estate Securities Inc., Bear Stearns, Bank of America N.A., J.P. Morgan Chase, IXIS Real Estate Capital Inc., Credit Suisse First Boston Mortgage Capital LLC, Barclays Bank PLC, ABN AMRO, and Calyon New York Branch.

As of May 1, American Home’s outstanding debut under the commercial paper program was $2.7 billion, the aggregate outstanding balance under the warehouse facilities was $4.7 billion, and the aggregate maximum amount available for additional borrowings was $5 billion.

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