American Home Slashes Payout

American Home Mortgage (AHM Quote) slashed its dividend by 38% and scaled back earnings forecasts as the market for subprime loans remains stalled out.

The Melville, N.Y., mortgage company said Friday it expects to make 40 to 60 cents a share for the first quarter and $3.75 to $4.25 a share for the year. Analysts surveyed by Thomson Financial were looking for $1.06 for the quarter and $5 for the year.

"During March, conditions in the secondary mortgage and mortgage securities markets changed sharply," said CEO Michael Strauss. "In particular, these markets were characterized by far fewer buyers offering materially lower prices, both for loan pools and for AA, A, BBB and residual mortgage securities. These changes had a significant, adverse impact on our company's first-quarter results, reducing our gain on sale revenue and causing mark-to-market losses in our portfolio.

"While the market may recover, and while we will attempt to restore our gain on sale margins by raising interest rates charged to consumers, our working assumption must be that current market conditions will persist and that our gain on sale margins will not recover through the balance of the year," he said. ...