American Home Mortgage Profits Soar in Fourth Quarter

American Home Mortgage Investment Corp. said on Thursday that fourth-quarter earnings climbed more than four times as the mortgage lender lent more money to people buying homes and charged high interest rates on those mortgages.

According to Business Week, shares of the mortgage company jumped on the news, rising $1.11, or 3.4 percent, to $33.50 in premarket trading, after closing Wednesday at $32.39 on the new York Stock Exchange.

American Home Mortgage reported fourth-quarter net income after paying preferred dividends of $61.4 million, or $1.21 per share, compared with profit of $13.4 million, or 27 cents per share, in the fourth quarter.

Revenue surged 71 percent to $257.7 million from $150.5 million. Analysts polled by Thomson Financial forecast the mortgage loan provider’s profit at $1.19 per share on $240.8 million in revenue.

CEO Michael Strauss said American Home Mortgage lent an aggregate sum of $15.5 billion to home buyers during the quarter.

The average balance of mortgages in American Home Mortgage’s portfolio rose by a fifth, and the average mortgage rates charged on the company’s home loans rose to 6.08 percent from 5.27 percent.

Strauss said more borrowers missed mortgage loan payments during the fourth quarter than any quarter in the company’s history.

The rate of delinquency rose sharply and is expected to remain at elevated levels throughout 2007, leading to a spike in loan foreclosures, the company said.

American Home Mortgage set aside $6.7 million anticipating losses from bad loans, compared with a provision of $5.4 million in the prior quarter. The company recorded a charge anticipating problems collecting mortgage loans.

For 2006, net income totaled $250.3 million, or $4.96 per share, compared with a profit of $247.6 million, or $5.58 per share, in 2005.