840889--8/15/2006--DORAL_FINANCIAL

related topics

{loan, real, estate}

{control, financial, internal}

{regulation, change, law}

{capital, credit, financial}

{personnel, key, retain}

{debt, indebtedness, cash}

{condition, economic, financial}

Doral Financial and its banking subsidiaries are subject to the supervision and regulation of various banking regulators and have entered into consent orders with these regulators. These regulators could take action against the Company or its banking subsidiaries. Recent downgrades in Doral Financial s credit ratings will increase Doral Financial s borrowing costs and may lessen Doral Financial s ability to compete in certain business. Doral Financial s failure to comply with certain reporting covenants under its public debt indentures may result in the acceleration of its public debt securities and other debt arrangements. Management has identified several material weaknesses in Doral Financial s internal control over financial reporting. Doral Financial does not expect to be able to access the public capital markets until all of its filings with the SEC are up to date. There is a lack of public disclosure concerning Doral Financial. Doral Financial may fail to attract and retain key employees and management personnel. Risks Relating to Doral Financial s Business Fluctuations in interest rates may negatively impact Doral Financial s business. Doral Financial must identify and satisfy the requirements of new loan sale channels for its non-conforming mortgage loan production. Doral Financial is exposed to credit risks from mortgage loans held pending sale and mortgage loans that have been sold subject to recourse arrangements. Doral Financial is subject to default risk in connection with the loans it originates for its own portfolio. Increases in Doral Financial s originations of construction and commercial loans have increased Doral Financial s credit risks. Doral Financial is exposed to greater risk because its business is concentrated in Puerto Rico. Doral Financial is subject to risks in servicing loans for others.

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840889--8/15/2006--DORAL_FINANCIAL_CORP