The investments in Interest Only Strips
are illiquid (and encumbered) and may not produce cash flow to FPFI for many years, if ever.
As previously disclosed, it is unlikely that FIRSTPLUS will reconstitute any of its previous business plans, such as originating mortgage loans, servicing mortgage loan portfolios, or investing in mortgage loan portfolios and Interest Only Strips
The investments in the Interest Only Strips
are illiquid and may not produce cash flow to FirstPlus Financial, Inc.
Salomon Levis, Chairman of the Board and Chief Executive Officer of Doral Financial Corporation (NYSE:DRL), today announced that after consulting with various financial institutions and other firms with experience in valuation issues, the Company has determined that it is appropriate to correct the methodology used to calculate the fair value of its portfolio of floating rate interest only strips
Classes I S and II S are interest only strips
that receive their cash flow prior to all other classes.
These upward adjustments in earnings are solely the result of increases in the carrying value of its Interest Only Strips
("I/O Strips") generated in the December 1997 and March 1998 quarters.
The increase in revenue compared with the December 1997 quarter is the result of increases in all lending and servicing related revenue streams, including increases in interest income earned on loans held-for- sale and interest only strips
("I/O Strips"), along with a significant increase in origination income.
Dan Phillips also stated that "The company will continue to monitor and manage its shareholders' residual interests in the company's interest only strips
and continue to move forward with its accounting and SEC compliance initiatives.
Then on April 19, 2005, the Company announced that it had determined that "it is appropriate to correct the methodology used to calculate the fair value of its portfolio of floating rate interest only strips
Specifically, defendants orchestrated a massive accounting fraud through which they improperly valued Doral's Interest Only Strips
("IOs") and misled investors as to the Company's vulnerability to interest rate increases.
We currently estimate that the change in our valuation model will result in a reduction in the recorded fair value of our floating rate interest only strips
(IOs) of approximately $600 million.
org/), formerly the National Association of Securities Dealers ("NASD"), involved allegations of misrepresentation and omission of investments in Collateralized Mortgage Obligations ("CMOs") and CMO Interest Only strips