Bankruptcy Treatment of Whole Loan Repos and Related Servicing Rights

January 14, 2008

On January 4, 2008, the United States Bankruptcy Court for the District of Delaware issued an opinion in the adversary proceeding between Calyon and American Home Mortgage Corp. and certain of its subsidiaries (the “Debtors”). Judge Sontchi’s opinion found that the safe harbor provisions of the Bankruptcy Code (as amended in 2005) applied to a repurchase agreement involving the purchase and sale of mortgage loans. However, the Court also held that the portion of the repurchase agreement relating to the servicing of the mortgage loans was not protected by the safe harbor provisions and refused to force AHM’s servicing affiliate to transfer servicing rights to Calyon as a result of the Debtors’ default under the repurchase agreement. Attached is a memorandum summarizing the ruling.

Please do not hesitate to use the contact information included in the Memorandum if you have any questions.