1174735--3/16/2006--ACCREDITED_HOME_LENDERS_HOLDING

related topics

{loan, real, estate}

{debt, indebtedness, cash}

{regulation, change, law}

{tax, income, asset}

{stock, price, share}

{stock, price, operating}

{product, market, service}

{personnel, key, retain}

{system, service, information}

{loss, insurance, financial}

{provision, law, control}

{operation, natural, condition}

{competitive, industry, competition}

{acquisition, growth, future}

{regulation, government, change}

We face intense competition that could adversely impact our market share and our revenues. Any substantial economic slowdown could increase delinquencies, defaults and foreclosures and reduce our ability to originate loans. We finance borrowers with lower credit ratings. The non-prime loans we originate generally have higher delinquency and default rates than prime mortgage loans, which could result in losses on loans that we hold or that we are required to repurchase, the loss of our servicing rights and damage to our reputation as a loan servicer. An increase in interest rates could result in a reduction in our loan origination volumes, an increase in delinquency, default and foreclosure rates and a reduction in the value of, and income from, our loans. Our business may be significantly harmed by a slowdown in the economy or a natural disaster in the states of California or Florida, where we conduct a significant amount of business. Our hedging strategies may not be successful in mitigating our risks associated with interest rates. Our business requires a significant amount of cash and if it is not available our business will be significantly harmed. Our credit facilities contain covenants that restrict our operations and may inhibit our ability to grow our business and increase revenues. Our rights to cash flow from our loans held for investment subject to portfolio-based accounting are subordinate to senior interests and may fail to generate any cash flow for us if the mortgage loan payment stream only generates enough cash flow to pay the senior interest holders. If we do not manage our growth effectively, our financial performance could be harmed. Our inability to attract and retain qualified employees could significantly harm our business. We may not be able to continue to sell and securitize our mortgage loans on terms and conditions that are profitable to us. An interruption in, or breach of, our information systems may result in lost business. The success and growth of our business will depend upon our ability to adapt to and implement technological changes. If we are unable to maintain and expand our network of independent brokers, our loan origination business will decrease. Our financial results fluctuate as a result of seasonality and other timing factors, which makes it difficult to predict our future performance and may affect the price of our common stock. We are subject to losses due to fraudulent and negligent acts on the part of loan applicants, mortgage brokers, other vendors and our employees. Defective loans may harm our business. If the prepayment rates for our mortgage loans are different than expected, our results of operations may be significantly harmed. We are exposed to environmental liabilities, with respect to properties that we take title to upon foreclosure, that could increase our costs of doing business and harm our results of operations. The scope of our operations exposes us to risks of noncompliance with an increasing and inconsistent body of complex laws and regulations at the federal, state and local levels. Stockholder refusal to comply with regulatory requirements may interfere with our ability to do business in certain states. We may be subject to fines or other penalties based upon the conduct of our independent brokers. We are no longer able to rely on the Alternative Mortgage Transactions Parity Act to preempt certain state law restrictions on prepayment penalties, and we may be unable to compete effectively with financial institutions that are exempt from such restrictions. The increasing number of federal, state and local anti-predatory lending laws may restrict our ability to originate, or increase our risk of liability with respect to, certain mortgage loans and could increase our cost of doing business. Our guarantee of the Series A preferred shares of the REIT is senior to claims of our common stockholders. If the REIT fails to maintain its status as a real estate investment trust, the REIT will be subject to federal and state income tax on taxable income at regular corporate rates, and the value of our common stock may be adversely impacted as a result. The market price of our common stock could be volatile. Some provisions of our certificate of incorporation and bylaws may deter takeover attempts, which may limit the opportunity of our stockholders to sell their shares at a favorable price.

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1174735--3/16/2006--ACCREDITED_HOME_LENDERS_HOLDING_CO