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Accredited Home Lenders Post Big Loss Due to Defaults

Accredited Home Lenders Holding reported a quarterly loss three times larger than Wall Street expected as more homeowners defaulted on mortgages.

The net loss for the San Diego-based subprime mortgage lender, which makes loans to Americans with poor credit histories, totaled $37.8 million, or $1.49 per share, compared
with a year-earlier profit of $43.3 million, or $1.96.

Analysts polled by Reuters Estimates on average forecast a loss of 48 cents per share.

Chief Executive James Konrath called Accredited's results "dissatisfying," citing a "difficult credit environment." Accredited bought Los Angeles' Aames Investment on Oct. 1.

Subprime lenders are being battered by lower volumes, narrow margins and rising defaults. As home price appreciation slows, many borrowers are finding it more difficult to refinance adjustable-rate loans as rates reset higher.

Accredited said on Wednesday it set aside $42 million more reserves at year-end than in September because delinquencies are rising, and investors are forcing it to buy back more
soured loans.

Lending volumes also declined, as mortgage originations fell 18% to $3.87 billion.

The company will not issue a 2007 earnings forecast, yet said market turbulence will persist through the year's first half. It expects loan volume to decline and origination costs to rise in the first quarter from the fourth quarter.

Earlier this week, ResMae Mortgage, a Brea, California, subprime lender, filed for Chapter 11 bankruptcy protection. Two other big subprime lenders, Mortgage Lenders Network USA and Ownit Mortgage Solutions, have also sought protection from creditors since late December.