American Home Trims Guidance

But American Home is still anticipating that gain-on-sale margins in the near future "will continue near the low levels" experienced during the first quarter, he said.

On Monday, American Home cut its full-year earnings estimate again. The company now expects to make between $3.25 and $3.75 a share this year.

Earlier this month, American Home warned investors that it would make between 40 cents and 60 cents a share in the first quarter and between $3.75 and $4.25 for the year.

Analysts were originally expecting it to earn $1.06 in the quarter and $5 for the year. American Home attributed the lower earnings to poor market conditions which reduced its gain on sale revenues and forced it to have write-downs of "low investment grade and residual securities."

The firm also said that a "disproportionate share" of its nonperforming loans are repurchased Alternate-A loans.

The company was not the only lender affected by the meltdown of the subprime sector last quarter. New Century (NEWC Quote) filed for Chapter 11 bankruptcy protection April 2, and even stronger lenders such as Countrywide(CFC Quote) and Washington Mutual(WM Quote) have taken a hit.

Shares of American Home were trading up 54 cents to $24.35 on Monday.