Mortgage Transactions Prompt Bank Restatements

First BanCorp, the parent company of FirstBank Puerto Rico, San Juan, has announced that it will restate its earnings from 2001 through the first quarter of this year because certain of its mortgage-related transactions do not qualify as sales for accounting purposes.The company said a "substantial portion" of its mortgage-related transactions with Doral Financial Corp. and R&G Financial Corp. since 1999 do not so qualify. The restatements will also correct the accounting treatment of certain interest rate swaps, First BanCorp said. The Doral and R&G transactions in question were accounted for as purchases of residential real estate loans and commercial mortgage loans. The restatement will reflect the transactions as commercial loans secured by mortgages, the company said. The revised classification will not result in a need for additional reserves, but it has led the company to terminate its commitments to purchase mortgage loan portfolios from Doral, First BanCorp said. The company can be found online at http://www.firstbankpr.com.