American Home Lowers Profit Expectations

American Home Mortgage Investment Corp., Melville, N.Y., has announced that it expects to record only a small profit in the fourth quarter and that its adjusted annual earnings will fall below its previous guidance of $4.60-$4.80 per share.The company said it was hit near the end of the fourth quarter by a rapid reduction in the value of its mortgage loans held for sale and its investment portfolio due to an "unusually severe" widening of the yield differential between the London interbank offered rate and both mortgages and junior mortgage securities. "During December the secondary mortgage market became one-sided, with very few buyers being offered a large amount of product," said Michael Strauss, American Home's chairman and chief executive officer. "Most buyers moved to the sidelines to wait out the holidays, and significant discounts to what had been standard pricing a few weeks earlier were necessary to sell loans, driving yields sharply higher. I believe market conditions at the end of the fourth quarter were, in part, an anomaly and that equilibrium is returning to the market as we move into January." The company can be found online at http://www.americanhm.com.