American Home Mortgage Provides Mid-Quarter Update

  
    
  
  
    
      American Home Mortgage Investment Corp. (NYSE: AHM) announced today that 
      it will take substantial charges for credit-related expenses in the 
      second quarter. As a result, the Company’s 
      second quarter financial results are uncertain, and it is likely the 
      Company will experience a second quarter loss. As has been previously 
      described, the Company’s credit-related 
      expenses have been primarily caused by the three month “timely 
      payment” warranty the Company granted to loan 
      buyers who purchased stated income loans with high loan to value ratios 
      from the Company. The Company has stopped making these types of loans. 
      Consequently, the Company believes that the high credit-related charges 
      resulting from prior loan sales will diminish as the three month “timely 
      payment” warranty expires.
    
    
      Michael Strauss, American Home’s Chief 
      Executive Officer, commented, “Our company’s 
      goal is to put the impact from the discontinued products behind us. A 
      benefit of the substantial reserves we are establishing in the second 
      quarter is that the discontinued product’s 
      impact on our future financial results is likely to diminish. As we put 
      the impact from the discontinued products behind us, the positive 
      contributions from our portfolio, mortgage origination franchise and 
      loan servicing business will again drive our results. Altogether, the 
      second quarter will be a period of “clean-up” 
      as the impact from the discontinued products continues to wind down.”
    
    
      While charges related to repurchases of discontinued products will have 
      a significant impact on the Company’s second 
      quarter results, new repurchase claims have dropped substantially as the 
      second quarter has progressed. Specifically, claims reached a high in 
      April, but May and June claims have declined approximately 53% from 
      April levels. Claims are typically made shortly after the expiration of 
      the warranty period. The reduction in new claims is a result of the 
      expiration of the three month “timely payment” 
      warranty on loans previously sold by the Company. Claims and related 
      reserves are expected to continue to trend lower in the third and fourth 
      quarters.
    
    
      SECOND QUARTER LOSS WILL BE LIMITED
    
    
      The Company’s delinquency-related charges in 
      the second quarter will be substantial. In addition, the Company expects 
      that it will reclassify a portion of its other comprehensive loss. The 
      reclassification will be charged to current quarter earnings, but will 
      reduce other comprehensive loss by a like amount, and consequently will 
      not affect the Company’s equity. Altogether, 
      the total amount of loss in the second quarter is expected to be 
      contained. Specifically, the Company expects that its total stockholder’s 
      equity will actually be higher at the end of the second quarter compared 
      to the first quarter of 2007.
    
    
      EARNINGS GUIDANCE WITHDRAWN
    
    
      Because of Company’s second quarter results 
      and current conditions in the mortgage industry, the Company is 
      withdrawing its previously issued earnings guidance for 2007. The 
      Company expects to reestablish earnings guidance toward year-end.
    
    
      DIVIDENDS POLICY REAFFIRMED
    
    
      While losses from the “timely payment” 
      warranty on discontinued products will drive the Company’s 
      second quarter results, base results from the Company’s 
      mortgage origination business have benefited from a stabilization of the 
      secondary mortgage market. Specifically, the Company’s 
      loan pools offered for sale are now attracting multiple bidders and are 
      being traded at supportive prices. Based on the Company’s 
      ongoing revenue from its portfolio, loan sales and servicing fees, the 
      Company is reaffirming its quarterly dividend policy of $0.70 per common 
      share. The dividend policy is subject to change without notice, and the 
      Company’s Board of Directors may reduce or 
      eliminate the dividends if it believes the Company’s 
      prospects warrant such a change.
    
    
      ISSUANCE OF CONVERTIBLE TRUST 
      PREFERRED SECURITIES
    
    
      The Company also announced today that it has issued in a private 
      placement $125 million of convertible trust preferred securities to 
      funds managed by Marathon Asset Management, LLC. The trust preferred 
      securities pay a dividend of 9.75% per annum, and are convertible into 
      the Company’s common stock at an initial 
      conversion price of $25.57 per share. The conversion price is subject to 
      limited downward adjustments based on the performance of the Company’s 
      shares and its common dividend yield.
    
    
      ABOUT AMERICAN HOME
    
    
      American Home Mortgage Investment Corp. is a mortgage real estate 
      investment trust (REIT) focused on earning net interest income from 
      self-originated loans and mortgage-backed securities, and, through its 
      taxable subsidiaries, from originating and selling mortgage loans and 
      servicing mortgage loans for institutional investors. Mortgages are 
      originated through a network of loan production offices and mortgage 
      brokers as well as purchased from correspondent lenders, and are 
      serviced at the Company’s Irving, Texas 
      servicing center. For additional information, please visit the Company's 
      website at www.americanhm.com.
    
    
      This news release contains “forward-looking 
      statements” that are based upon expectations, 
      estimates, forecasts, projections and assumptions. Any statement in this 
      news release that is not a statement of historical fact, including, but 
      not limited to, earnings guidance and forecasts, projections of 
      financial results and loan origination volume, expected future financial 
      position, dividend plans or business strategy, and any other statements 
      of plans, expectations, objectives, estimates and beliefs, is a 
      forward-looking statement. Words such as “look 
      forward,” “will,” 
      “anticipate,” “may,” 
      “expect,” “plan,” 
      “believe,” “intend,” 
      “opportunity,” “potential,” 
      and similar words, or the negatives of those words, are intended to 
      identify forward-looking statements. Such forward-looking statements 
      involve known and unknown risks, uncertainties and other factors that 
      are difficult to predict, and are not guarantees of future performance. 
      As a result, actual future events may differ materially from any future 
      results, performance or achievements expressed in or implied by this 
      news release. Specific factors that might cause such a difference 
      include, but are not limited to: American Home’s 
      limited operating history with respect to its portfolio strategy; the 
      potential fluctuations in American Home’s 
      operating results; American Home’s potential 
      need for additional capital; the direction of interest rates and their 
      subsequent effect on the business of American Home and its subsidiaries; 
      risks associated with the use of leverage; changes in federal and state 
      tax laws affecting REITs; federal and state regulation of mortgage 
      banking; and those risks and uncertainties discussed in filings made by 
      American Home with the Securities and Exchange Commission. Such 
      forward-looking statements are inherently uncertain, and stockholders 
      must recognize that actual results may differ from expectations. 
      American Home does not assume any responsibility, and expressly 
      disclaims any responsibility, to issue updates to any forward-looking 
      statements discussed in this news release, whether as a result of new 
      information, future events or otherwise.