DEL MAR, Calif., Jan. 4 /PRNewswire/ -- American Residential Investment
Trust, Inc. (NYSE: INV) today announced that on January 3, 2001 it filed a
lawsuit in the California Superior Court in San Diego seeking to recover
damages arising from its purchase of a pool of residential mortgage loans from
Lehman Capital, a Division of Lehman Brothers Holdings, Inc., in late 1997 and
early 1998. The lawsuit names Long Beach Mortgage Company, Inc. as a
defendant.
The complaint seeks damages for losses arising out of American
Residential's agreement to purchase loans from Lehman Capital, which had
acquired a loan portfolio from Long Beach Mortgage Co., and assigned the loans
and the agreement with Long Beach Mortgage Co. to American Residential. The
complaint alleges, among other claims, that Lehman Capital and Long Beach
Mortgage Co. breached their obligations to American Residential under the
purchase agreements for the sale of the loans. The complaint also seeks
recovery from Lehman Capital and Long Beach Mortgage Co. for negligent
misrepresentations made in connection with the sale of the loans. The
complaint alleges damages for the losses incurred due to Lehman Capital and
Long Beach Mortgage Co.'s failure to repurchase a number of these loans which
damages are estimated to exceed $5,000,000 and for additional damages
including repayment of all, or a portion of, the premium paid to Lehman
Capital and damages equal to the return on the loans, if the loans had
performed as represented.
The loans acquired from Long Beach Mortgage Co. account for a portion of
all loans acquired by American Residential. The poor performance of the pool
of loans adversely impacted American Residential's reported earnings for 1999
and 2000. The Company believes that its present reserves are adequate to
cover future losses arising from the matters alleged in the complaint.
Litigation expenses expected to be incurred in prosecuting the lawsuit have
not been reserved and will reduce earnings in future periods as the suit
progresses. The timing and amount of such expenses are uncertain.
The outcome of litigation is always uncertain and the facts involved in
the allegations of American Residential's lawsuit are complex. No assurance
can be given that American Residential will recover all or any portion of the
amounts claimed. Investors should not expect or rely on a successful
resolution of the proceeding, and in any event, no resolution can be expected
to occur for an extended period of time.
American Residential Investment Trust, Inc. is a real estate investment
trust (REIT) that invests primarily in non-conforming, residential mortgage
assets. For more information on American Residential, please visit the
Company's web site at http://www.amerreit.com.
Certain matters discussed in this press release may constitute
forward-looking statements within the meaning of federal securities laws.
Forward-looking statements include statements regarding the recovery of
damages from Lehman Capital and Long Beach Mortgage Co., the adequacy of
current reserves for future losses arising from the matters alleged in the
complaint, the reduction of future period earnings due to litigation expenses
and the timing and amount of litigation expenses. Actual results and the
timing of certain events could differ materially from those projected in, or
contemplated by, these forward-looking statements due to a number of factors,
including, but not limited to, general economic conditions; mortgage loan
prepayment rates; credit losses; and other risk factors outlined in the
Company's SEC reports.
SOURCE American Residential Investment Trust, Inc.
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Related links:
http://www.amerreit.com
CONTACT:
Judith Berry, 858-350-5012, or Clay
Strittmatter, 858-350-5006, both of American Residential
Investment Trust, Inc.; or Corinne Forti of Forti Communications,
Inc., 805-498-0113
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