UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the quarterly period ended March 31, 2004.


                                       OR


[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________.

Commission File Number: 001-31916


                     AMERICAN HOME MORTGAGE INVESTMENT CORP.
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


Maryland                                                              20-0103914
--------------------------------------------------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)


538 Broadhollow Road, Melville, New York                                   11747
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)


                                 (516) 949-3900
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)



--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

      As of May 4, 2004, there were 39,891,698 shares of the registrant's common
stock, par value $0.01 per share, outstanding.
<PAGE>


            AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
                                TABLE OF CONTENTS


This amendment on Form 10-Q/A reflects the restatement of the consolidated
financial statements of American Home Mortgage Investment Corp., as discussed in
Note 13 to the consolidated financial statements.

All of the information in this Form 10-Q/A is as of May 10, 2004, the filing
date of the original Form 10-Q for the quarter ended March 31, 2004, and has not
been updated for events subsequent to that date other than for the matter
discussed above.



                          PART I-FINANCIAL INFORMATION

                                                                           Page
                                                                           ----
Item 1.     Financial Statements

            Consolidated Balance Sheets as of March 31, 2004 and
              December 31, 2003...............................................1

            Consolidated Statements of Income for the Three Months
              Ended March 31, 2004 and 2003...................................2

            Consolidated Statements of Stockholders' Equity  for the
              Three Months Ended March 31, 2004 and 2003......................3

            Consolidated Statements of Cash Flows for the Three Months
              Ended March 31, 2004 (As Restated) and 2003.....................4

            Notes to Consolidated Financial Statements .......................5

Item 2.     Management's Discussion and Analysis of Financial Condition
              and Results of Operations......................................21

Item 3.     Quantitative and Qualitative Disclosures About Market Risk ......33

Item 4.     Controls and Procedures..........................................34


                            PART II-OTHER INFORMATION

Item 1.     Legal Proceedings................................................36

Item 2.     Changes in Securities, Use of Proceeds and Issuer
              Purchases of Equity Securities.................................36

Item 3.     Defaults Upon Senior Securities..................................36

Item 4.     Submission of Matters to a Vote of Security Holders..............36

Item 5.     Other Information................................................36

Item 6.     Exhibits and Reports on Form 8-K ................................37


SIGNATURES

INDEX TO EXHIBITS
<PAGE>

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
            AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (Unaudited)
                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                                       March 31,                  December 31,
                                                                                          2004                        2003
                                                                                  ---------------------       --------------------
<S>                                                                               <C>                         <C>
Assets:
  Cash and cash equivalents                                                       $             97,557        $            53,148
  Accounts receivable and servicing advances                                                    80,426                     84,311
  Mortgage-backed securities (including securities pledged of $3,574,125 and
    $1,426,477 as of March 31, 2004 and December 31, 2003, respectively)                     4,003,079                  1,763,628
  Mortgage loans held for sale, net                                                          1,371,048                  1,223,827
  Derivative assets                                                                             24,151                     20,837
  Mortgage servicing rights, net                                                               113,519                    117,784
  Premises and equipment, net                                                                   41,234                     41,738
  Goodwill                                                                                      83,752                     83,445
  Other assets                                                                                  12,213                     13,672
                                                                                  ---------------------       --------------------
    Total assets                                                                  $          5,826,979        $         3,402,390
                                                                                  =====================       ====================

Liabilities and Stockholders' Equity:
Liabilities:
  Warehouse lines of credit                                                       $          1,251,845        $         1,121,760
  Drafts payable                                                                                64,310                     25,625
  Reverse repurchase agreements                                                              3,394,941                  1,344,327
  Payable for securities purchased                                                             134,647                    259,701
  Derivative liabilities                                                                        21,295                     10,394
  Accrued expenses and other liabilities                                                        58,648                     76,156
  Notes payable                                                                                106,423                     99,655
  Income taxes payable                                                                          53,689                     66,802
                                                                                  ---------------------       --------------------
    Total liabilities                                                                        5,085,798                  3,004,420
                                                                                  ---------------------       --------------------

Commitments and contingencies                                                                        -                          -

Stockholders' Equity:
  Preferred stock, $0.01 per share par value, 10,000,000 shares authorized, none
    issued and outstanding                                                                           -                          -
  Common stock, $0.01 per share par value, 100,000,000 shares authorized,
    39,875,524 and 25,270,100 shares issued and outstanding as of March 31, 2004
    and December 31, 2003, respectively                                                            399                        252
  Additional paid-in capital                                                                   623,953                    281,432
  Retained earnings                                                                            125,504                    121,029
  Accumulated other comprehensive loss                                                          (8,675)                    (4,743)
                                                                                  ---------------------       --------------------

    Total stockholders' equity                                                                 741,181                    397,970
                                                                                  ---------------------       --------------------

      Total liabilities and stockholders' equity                                  $          5,826,979        $         3,402,390
                                                                                  =====================       ====================
</TABLE>
See notes to consolidated financial statements.


                                      -1-
<PAGE>

            AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
                (Dollars in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                                               Three Months Ended March 31,
                                                                                ----------------------------------------------------
                                                                                         2004                          2003
                                                                                ----------------------       -----------------------
<S>                                                                             <C>                          <C>
Net interest income:
     Interest income                                                            $              34,050        $               20,978
     Interest expense                                                                         (21,278)                      (10,209)
                                                                                ----------------------       -----------------------
          Total net interest income                                                            12,772                        10,769
                                                                                ----------------------       -----------------------

Non-interest income:
     Gain on sales of mortgage loans and mortgage-backed securities                            80,133                        88,211

     Loan servicing fees                                                                       10,318                        11,128
     Amortization                                                                              (7,346)                      (12,769)
     Impairment reserve provision                                                             (12,584)                       (5,713)
                                                                                ----------------------       -----------------------
          Net loan servicing fees (loss)                                                       (9,612)                       (7,354)
                                                                                ----------------------       -----------------------

     Other non-interest income                                                                    978                         2,928
                                                                                ----------------------       -----------------------
          Total non-interest income                                                            71,499                        83,785
                                                                                ----------------------       -----------------------

Non-interest expenses:
     Salaries, commissions and benefits, net                                                   39,782                        44,647
     Occupancy and equipment                                                                    8,094                         5,623
     Data processing and communications                                                         3,213                         3,079
     Office supplies and expenses                                                               3,118                         3,023
     Marketing and promotion                                                                    2,212                         2,799
     Travel and entertainment                                                                   2,577                         1,987
     Professional fees                                                                          2,428                         1,841
     Other                                                                                      5,438                         3,665
                                                                                ----------------------       -----------------------
          Total non-interest expenses                                                          66,862                        66,664
                                                                                ----------------------       -----------------------

Net income before income tax (benefit) expense                                                 17,409                        27,890

Income tax (benefit) expense                                                                   (3,814)                       11,577
                                                                                ----------------------       -----------------------

Net income                                                                      $              21,223        $               16,313
                                                                                ======================       =======================

     Per share data:
          Basic                                                                 $                0.71        $                 0.97
                                                                                ======================       =======================
          Diluted                                                               $                0.70        $                 0.96
                                                                                ======================       =======================

          Weighted average number of shares - basic                                        30,030,248                    16,750,960
          Weighted average number of shares - diluted                                      30,507,818                    17,015,681
</TABLE>
See notes to consolidated financial statements.

                                      -2-
<PAGE>

            AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
                   THREE MONTHS ENDED MARCH 31, 2004 AND 2003


<TABLE>
<CAPTION>

                                                           Shares of                           Additional
                                                            Common             Common            Paid-in           Retained
(Dollars in thousands)                                      Stock              Stock             Capital           Earnings
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>                   <C>              <C>               <C>
Balance at December 31, 2002                                 16,717,459   $            167  $         95,785  $         68,144
                                                     ===================  ================= ================= =================
Comprehensive income:
  Net income                                                          -                  -                 -            16,313
Comprehensive income
  Issuance of common stock, earnouts                             13,827                  -               142                 -
  Issuance of common stock, 1999 Omnibus
    Stock Incentive Plan                                         43,627                  1               325                 -
  Dividends declared                                                  -                  -                 -              (837)
                                                     -------------------  ----------------- ----------------- -----------------
Balance at March 31, 2003                                    16,774,913   $            168  $         96,252  $         83,620
                                                     ===================  ================= ================= =================

Balance at December 31, 2003                                 25,270,100   $            252  $        281,432  $        121,029
                                                     ===================  ================= ================= =================
Comprehensive income:
  Net income                                                          -                  -                 -            21,223
  Net unrealized gain on mortgage-backed
    securities available for sale                                     -                  -                 -                 -
  Gross unrealized loss on interest rate swaps                        -                  -                 -                 -
Comprehensive income
  Issuance of common stock, offering                         14,375,000                144           339,647                 -
  Issuance of common stock, earnouts                              4,758                  -               109                 -
  Issuance of common stock, 1999 Omnibus
    Stock Incentive Plan                                        225,666                  3             1,166                 -
  Tax benefit from stock options exercised                            -                  -             1,599                 -
  Dividends declared                                                  -                  -                 -           (16,748)
                                                     -------------------  ----------------- ----------------- -----------------
Balance at March 31, 2004                                    39,875,524   $            399  $        623,953  $        125,504
                                                     ===================  ================= ================= =================

<CAPTION>

                                                                Accumulated
                                                                  Other                  Total
                                                               Comprehensive         Stockholders'
(Dollars in thousands)                                             Loss                 Equity
------------------------------------------------------------------------------------------------------
<S>                                                       <C>                     <C>
Balance at December 31, 2002                              $                 -   $          164,096
                                                          ==================== ====================
Comprehensive income:
  Net income                                                                -               16,313
                                                                               --------------------
Comprehensive income                                                                        16,313
  Issuance of common stock, earnouts                                        -                  142
  Issuance of common stock, 1999 Omnibus
    Stock Incentive Plan                                                    -                  326
  Dividends declared                                                        -                 (837)
                                                          -------------------- --------------------
Balance at March 31, 2003                                 $                 -   $          180,040
                                                          ==================== ====================

Balance at December 31, 2003                              $            (4,743)  $          397,970
                                                          ==================== ====================
Comprehensive income:
  Net income                                                                -               21,223
  Net unrealized gain on mortgage-backed
    securities available for sale                                      10,221               10,221
  Gross unrealized loss on interest rate swaps                        (14,153)             (14,153)
                                                                               --------------------
Comprehensive income                                                                        17,291
  Issuance of common stock, offering                                        -              339,791
  Issuance of common stock, earnouts                                        -                  109
  Issuance of common stock, 1999 Omnibus
    Stock Incentive Plan                                                    -                1,169
  Tax benefit from stock options exercised                                  -                1,599
  Dividends declared                                                        -              (16,748)
                                                          -------------------- --------------------
Balance at March 31, 2004                                 $            (8,675)  $          741,181
                                                          ==================== ====================
</TABLE>

See notes to consolidated financial statements.


                                      -3-
<PAGE>

            AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                     Three Months Ended
                                                                          March 31,
                                                                 ----------------------------
                                                                     2004             2003
                                                                 ------------     -----------
                                                                 (As restated,
                                                                 see Note 13)
<S>                                                              <C>              <C>
Cash flows from operating activities:
Net income                                                       $      21,223    $    16,313
Adjustments to reconcile net income to net cash
  used in operating activities:
Depreciation and amortization                                            1,977          1,169
Amortization and impairment of mortgage servicing rights                19,930         18,482
Amortization of mortgage-backed securities premiums, net                 2,952             --
Deferred cash flow hedge gain, net of amortization                         415             --
Gain on sales of mortgage-backed securities and derivatives             (6,705)            --
Unrealized gain on mortgage-backed securities                          (10,217)            --
Additions to mortgage servicing rights on securitized loans             (9,863)            --
Additions to mortgage servicing rights on sold loans                    (5,802)        (5,832)
Increase in interest rate lock commitments                              (9,990)        (8,107)
Increase in deferred origination costs                                    (884)        (6,605)
Decrease (increase) in SFAS No. 133 basis adjustments                    5,524         (4,203)
Other                                                                   (2,504)           123
(Increase) decrease in operating assets:
        Accounts receivable and servicing advances                       3,885          3,029
        Other assets                                                     1,703         (1,373)
Increase (decrease) in operating liabilities:
        Accrued expenses and other liabilities                          (8,092)         4,821
        Income taxes payable                                           (13,113)         7,980
        Forward delivery contracts                                      (5,809)        (6,097)

Origination of mortgage loans held for sale                         (4,413,174)    (4,250,824)
Proceeds from sales and repayments of mortgage loans                 3,292,010      4,061,780
Proceeds from securitizations and repayments of mortgage loans         969,436             --
Additions to mortgage-backed securities                               (897,322)            --
Proceeds from sales of mortgage-backed securities                       23,861             --
Principal repayments of mortgage-backed securities                      13,734             --
                                                                 -------------    -----------
        Net cash used in operating activities                       (1,026,825)      (169,344)
                                                                 -------------    -----------

Cash flows from investing activities:
Purchases of premises and equipment                                     (1,473)        (2,347)
Purchases of mortgage-backed securities                             (2,094,101)            --
Proceeds from sales of mortgage-backed securities                      697,268             --
Principal repayments of mortgage-backed securities                      49,985             --
Other                                                                     (353)           369
                                                                 -------------    -----------
        Net cash used in investing activities                       (1,348,674)        (1,978)
                                                                 -------------    -----------

Cash flows from financing activities:
Increase in warehouse lines of credit, net                             130,085        173,275
Increase in reverse repurchase agreements, net                       2,050,614             --
Decrease in payable for securities purchased                          (125,054)            --
Increase in drafts payable, net                                         38,685          7,744
Proceeds from issuance of common stock                                 341,882            202
Dividends paid                                                         (23,072)          (837)
Increase (decrease) in notes payable, net                                6,768         (2,459)
                                                                 -------------    -----------
        Net cash provided by financing activities                    2,419,908        177,925
                                                                 -------------    -----------

Net increase in cash and cash equivalents                               44,409          6,603
Cash and cash equivalents, beginning of period                          53,148         24,416
                                                                 -------------    -----------

Cash and cash equivalents, end of period                         $      97,557    $    31,019
                                                                 =============    ===========
Supplemental disclosure of cash flow information:
Interest paid                                                    $      13,254    $     8,527
Income taxes paid                                                        6,361          5,256
</TABLE>

See notes to consolidated financial statements.


                                      -4-
<PAGE>

AMERICAN HOME MORTGAGE INVESTMENT CORP. AND SUBSIDIARIES



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - On December 3, 2003, American Home Mortgage Holdings, Inc. ("AHM
Holdings") completed its merger with Apex Mortgage Capital, Inc. ("Apex"). Under
the terms of the agreement, AHM Holdings reorganized through a reverse
triangular merger that caused American Home Mortgage Investment Corp. ("AHM
Investment"), a newly formed Maryland corporation that operates and will elect
to be treated as a real estate investment trust, or REIT, for federal income tax
purposes, to become AHM Holdings' parent. AHM Investment was formed to combine
the net assets of Apex, a Maryland corporation that operated and elected to be
treated as a REIT, with the mortgage origination and servicing businesses of AHM
Holdings. As used herein, references to the "Company," "American Home," "we,"
"our" and "us" refer to AHM Investment collectively with its subsidiaries.

AHM Investment is a mortgage REIT focused on earning net interest income from
purchased and self-originated mortgage-backed securities, and through its
taxable subsidiaries, on earning income from originating and selling mortgage
loans and servicing mortgage loans for institutional investors. Mortgages are
originated through a network of 279 loan origination offices as well as through
mortgage brokers and are serviced at the Company's Columbia, Maryland servicing
center.

Basis of Presentation - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The Company's estimates and assumptions
primarily arise from risks and uncertainties associated with interest rate
volatility, prepayment volatility, credit exposure and regulatory changes.
Although management is not currently aware of any factors that would
significantly change its estimates and assumptions in the near term, future
changes in market trends and conditions may occur which could cause actual
results to differ materially. When necessary, certain reclassifications of prior
year financial statement amounts have been made to conform to the current year
presentation.

The unaudited consolidated financial statements included herein have been
prepared in conformity with generally accepted accounting principles ("GAAP")
for interim financial information. Accordingly, they do not include all of the
information and notes required by GAAP for complete financial statements.
Management believes all adjustments considered necessary for a fair presentation
have been included. The consolidated financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
notes thereto included in the Company's Form 10-K for the year ended December
31, 2003.

Due to the fact that the Company exercises significant influence on the
operations of its joint ventures, their balances and operations have been fully
consolidated in the accompanying consolidated financial statements and all
intercompany accounts and transactions have been eliminated.

Cash and Cash Equivalents - Cash and cash equivalents include cash on hand,
amounts due from banks and overnight deposits.

Mortgage-backed Securities - Mortgage-backed securities are classified as either
trading or available for sale. Trading securities are reported at fair value,
and changes in fair value are reported in gain on sales of mortgage loans and
mortgage-backed securities in the statements of operations. Available for sale
securities are reported at fair value, with unrealized gains and losses excluded
from earnings and reported in accumulated other comprehensive income (loss).
Realized gains and losses on sales of available for sale securities are
determined on an average cost basis and included in gain on sales of mortgage
loans and mortgage-backed securities.

When the fair value of an available for sale security is less than amortized
cost, management considers whether there is an other-than-temporary impairment
in the value of the security (e.g., whether the security will be sold prior to
the recovery of fair value). If, in management's judgment, an
other-than-temporary impairment exists, the cost basis of the security is
written down to the then-current fair value, and the unrealized loss is
transferred from accumulated other comprehensive income as an immediate
reduction of current earnings (i.e., as if the loss had been realized in the
period of impairment).

Mortgage Loans Held for Sale - Mortgage loans held for sale are carried at the
lower of cost or aggregate market value. The cost basis includes the capitalized
value of the interest rate lock commitments ("IRLCs") related to the mortgage
loans and any net deferred origination costs. For mortgage loans held for sale
that are hedged with forward sale commitments, the carrying value is adjusted
for the


                                      -5-
<PAGE>

change in market during the time the hedge was deemed to be highly effective.
The market value is determined by outstanding commitments from investors or
current investor yield requirements calculated on the aggregate basis.

Mortgage Servicing Rights - Mortgage servicing rights ("MSRs") are carried at
the lower of cost or fair value, based on defined risk strata and are amortized
in proportion to and over the period of estimated net servicing income. When the
Company sells certain loans and retains the servicing rights, it allocates the
cost basis of the loans between the assets sold and the MSRs based on their
relative fair values on the date of sale.

The Company estimates the fair value of its MSRs by obtaining market information
from one of the primary mortgage servicing rights brokers. When the book value
of capitalized MSRs exceeds their fair value, impairment is recognized through a
valuation allowance. In determining impairment, the mortgage servicing portfolio
is stratified by the predominant risk characteristic of the underlying mortgage
loans. The Company has determined that the predominant risk characteristic is
the interest rate on the underlying loans. The Company measures impairment for
each stratum by comparing the estimated fair value to the recorded book value.
Temporary impairment is recorded through a valuation allowance and amortization
expense in the period of occurrence. In addition, the Company periodically
evaluates its MSRs for other than temporary impairment to determine if the
carrying value before the application of the valuation allowance is recoverable.
The Company receives a sensitivity analysis of the estimated fair value of its
MSRs assuming a 200-basis-point instantaneous increase in interest rates from an
independent mortgage servicing rights broker. The fair value estimate includes
changes in market assumptions that would be expected given the increase in
mortgage rates (e.g., prepayment speeds would be lower). The Company believes
this 200-basis-point increase in mortgage rates to be an appropriate threshold
for determining the recoverability of the temporary impairment because that size
rate increase is foreseeable and consistent with historical mortgage rate
fluctuations. When using this instantaneous change in rates, if the fair value
of the strata of MSRs is estimated to increase to a point where all of the
impairment would be recovered, the impairment is considered to be temporary.
When the Company determines that a portion of the MSRs is not recoverable, the
related MSRs and the previously established valuation allowance are
correspondingly reduced to reflect other than temporary impairment.

Premises and Equipment - Premises and equipment is stated at cost less
accumulated depreciation and amortization. Depreciation is provided using the
straight-line method over their estimated service lives. Leasehold improvements
are amortized over the lesser of the life of the lease or service lives of the
improvements using the straight-line method. Depreciation and amortization are
recorded within occupancy and equipment expense within the consolidated
financial statements.

Goodwill - Goodwill represents the excess purchase price over the fair value of
net assets acquired from business acquisitions and which were being amortized
over their initial estimated lives, generally 20 years. Effective January 1,
2002, the Company no longer amortizes goodwill, but instead tests for impairment
at least annually. The Company will test for impairment more frequently if
events or circumstances indicate that an asset may be impaired. The Company
tests for impairment by comparing the fair value of goodwill, as determined by
using a discounted cash flow method, with its carrying value. Any excess of
carrying value over the fair value of the goodwill would be recognized as an
impairment loss in continuing operations. The discounted cash flow calculation
related to the Company's loan origination segment includes a forecast of the
expected future loan originations and the related revenues and expenses. The
discounted cash flow calculation related to the Company's mortgage-backed
securities holdings segment includes a forecast of the expected future net
interest income, gain on mortgage-backed securities and the related revenues and
expenses. These cash flows are discounted using a rate that is estimated to be a
weighted-average cost of capital for similar companies. We further test to
ensure that the fair value of all of our business units does not exceed our
total market capitalization.


                                      -6-
<PAGE>

Reverse Repurchase Agreements - The Company has entered into reverse repurchase
agreements to finance certain of its investments. These agreements are secured
by a portion of the Company's investments and bear interest rates that have
historically moved in close relationship to LIBOR. Reverse repurchase agreements
are accounted for as short-term borrowings and recorded as a liability on the
balance sheet.

Drafts Payable - Drafts payable represent outstanding mortgage loan
disbursements that the Company has provided to its customers for the purchase of
a home. The amounts outstanding do not bear interest and are transferred into
the warehouse facility when they are presented to a bank.

Derivative Financial Instruments - The Company has developed risk management
programs and processes designed to manage market risk associated with normal
business activities.

Interest Rate Lock Commitments. The Company's mortgage committed pipeline
includes IRLCs that have been extended to borrowers who have applied for loan
funding and meet certain defined credit and underwriting criteria. The Company
classifies and accounts for the IRLCs as free-standing derivatives. Accordingly,
IRLCs are recorded at fair value with changes in fair value recorded to current
earnings. The fair value of the IRLCs is determined by an estimate of the
ultimate gain on sale of the loans, including the value of MSRs, net of
estimated net costs to originate the loan. In March 2004, the Securities and
Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 105 ("SAB No.
105"), which will change the timing of recognition of MSRs for IRLCs initiated
after March 31, 2004. See "Recently Issued Accounting Standards" in this note.

Forward Delivery Commitments Used to Hedge IRLCs. The Company uses mortgage
forward delivery contracts to economically hedge the IRLCs, which are also
classified and accounted for as free-standing derivatives and thus are recorded
at fair value with the changes in fair value recorded to current earnings.

Forward Delivery Commitments Used to Hedge Mortgage Loans Held for Sale. The
Company's risk management objective for its mortgage loans held for sale is to
protect earnings from an unexpected charge due to a decline in value. The
Company's strategy is to engage in a risk management program involving the use
of mortgage forward delivery contracts designated as fair value hedging
instruments to hedge 100% of its agency-eligible conforming loans and most of
its non-conforming loans held for sale. At the inception of the hedge, the
Company formally documents the relationship between the forward delivery
contracts and the mortgage inventory as well as its objective and strategy for
undertaking the hedge transactions. For conventional conforming fixed-rate
loans, the notional amount of the forward delivery contracts, along with the
underlying rate and terms of the contracts, are equivalent to the unpaid
principal amount of the mortgage inventory being hedged; hence, the forward
delivery contracts effectively fix the forward sales price and thereby
substantially eliminate interest rate and price risk to the Company. The Company
classifies and accounts for these forward delivery contracts as fair value
hedges. The derivatives are carried at fair value with the changes in fair value
recorded to current earnings. When the hedges are deemed highly effective, the
book value of the hedged loans held for sale is adjusted for its change in fair
value during the hedge period.

Forward Purchase Contracts Used to Hedge MSRs. From time to time, the Company
hedges its exposure to impairment of the MSRs by the use of mortgage forward
purchase contracts. These derivatives are classified and accounted for as fair
value hedges. The mortgage forward purchase contracts are carried at fair value
with the changes in their fair value recorded to current earnings. When the
hedges are deemed to be highly effective, the book value of the hedged MSRs is
adjusted for its change in fair value attributable to the hedged risk during the
hedge period. The Company assesses the effectiveness of the hedge by using
statistical analysis to measure the correlation of the changes in the value of
the forward purchase contract to the changes in the value of the MSRs being
hedged during the hedge period. During the three months ended March 31, 2004 and
the year ended December 31, 2003, the Company did not hedge its exposure to
impairment of the MSRs by the use of mortgage forward purchase contracts.

Interest Rate Swap Agreements - All swap agreements are designated as cash flow
hedges against the benchmark interest rate risk associated with the Company's
borrowings. Although the terms and characteristics of the Company's swap
agreements and hedged borrowings are nearly identical, due to the explicit
requirements of Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," the Company does
not account for these hedges under a method defined in SFAS No. 133 as the
"shortcut" method, but rather the Company calculates the effectiveness of these
hedges on an ongoing basis, and, to date, has calculated effectiveness of
approximately 100%. All changes in the unrealized gains and losses on swap
agreements have been recorded in "accumulated other comprehensive loss" and are
reclassified to earnings as interest expense is recognized on the Company's
hedged borrowings. If it becomes probable that the forecasted transaction, which
in this case refers to interest payments to be made under the Company's
short-term borrowing agreements, will not occur by the end of the originally
specified time period, as documented at the inception of the hedging
relationship, or within an additional two-month time period thereafter, then the
related gain or loss in accumulated other comprehensive loss would be
reclassified to income.

Termination of Hedging Relationships. The Company employs a number of risk
management monitoring procedures to ensure that the designated hedging
relationships are demonstrating, and are expected to continue to demonstrate, a
high level of effectiveness. Hedge


                                      -7-
<PAGE>

accounting is discontinued on a prospective basis if it is determined that the
hedging relationship is no longer highly effective or expected to be highly
effective in offsetting changes in fair value of the hedged item. Additionally,
the Company may elect to de-designate a hedge relationship during an interim
period and re-designate upon the rebalancing of a hedge profile and the
corresponding hedge relationship. When hedge accounting is discontinued, the
Company continues to carry the derivative instruments at fair value with changes
in their value recorded in earnings.

Gain on Sale of Loans - The Company recognizes gain on sale of loans for the
difference between the sales price and the adjusted book value of the loans at
the time of sale. The adjusted book value of the loans includes the original
principal amount plus adjustments related to previously recognized income plus
deferrals of fees and points received and direct loan origination costs.

Loan Origination Fees and Direct Origination Costs - The Company records loan
fees, discount points and certain direct origination costs as an adjustment of
the cost of the loan or security and such amounts are included in revenues when
the loan or security is sold. When loans are securitized and held, net deferred
origination costs are amortized over the life of the security using the
level-yield method and such amounts are included in interest income. Gain on
sales of mortgage loans and salaries, commissions and benefits have been reduced
by $20.7 million and $16.3 million due to direct loan origination costs,
including commission costs, incurred for the three months ended March 31, 2004
and 2003, respectively.

Interest Recognition - The Company accrues interest income as it is earned.
Loans are placed on a nonaccrual status when any portion of the principal or
interest is 90 days past due or earlier when concern exists as to the ultimate
collectibility of principal or interest. Loans return to accrual status when
principal and interest become current and are anticipated to be fully
collectible. Interest expense is recorded on outstanding lines of credit at a
rate based on a spread to the LIBOR.

Servicing Fees - The Company recognizes servicing fees when the fees are
collected.

Marketing and Promotion - The Company charges the costs of marketing, promotion
and advertising to expense in the period incurred.

Income Taxes - The Company accounts for income taxes in conformity with SFAS No.
109, "Accounting for Income Taxes," which requires an asset and liability
approach for accounting and reporting of income taxes. Deferred tax assets and
liabilities are recognized for the future tax consequences ("temporary
differences") attributable to the differences between the carrying amounts of
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which temporary differences are expected to be recovered
or settled. A valuation allowance is provided for deferred tax assets where
realization is not considered "more likely than not." The Company recognizes the
effect of changes in tax laws or rates on deferred tax assets and liabilities in
the period that includes the enactment date.

Stock Option Plans - In 1999, the Company established the 1999 Omnibus Stock
Incentive Plan, as amended (the "Plan"). The Company has elected to account for
its stock option plan using Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and to provide pro forma net income
and pro forma earnings per share disclosures for employee stock option grants as
if the fair-value based method, as required by SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123," had been applied. Had compensation cost been determined
based on the fair value at the grant dates for awards under the Plan, the
Company's net income would have been $21.0 million and $16.2 million for the
three months ended March 31, 2004 and 2003, respectively. Basic earnings per
share would have been $0.70 and $0.97 for 2004 and 2003, respectively. Diluted
earnings per share would have been $0.69 and $0.95 for 2004 and 2003,
respectively.


                                      -8-
<PAGE>
<TABLE>
<CAPTION>
                                                                                            Three Months Ended March 31,
                                                                               ----------------------------------------------------
(In thousands, except per share data)                                                   2004                        2003
                                                                               -----------------------     -----------------------
<S>                                                                             <C>                        <C>
Net income, as reported                                                         $              21,223      $               16,313

Less: Total stock-based employee compensation expense determined
under fair value based method for all rewards, net of related tax effects                        (187)     $                 (134)
                                                                               -----------------------     -----------------------

Pro forma net income                                                            $              21,036      $               16,179
                                                                               =======================     =======================

Earnings per share:
    Basic - as reported                                                         $                0.71      $                 0.97
    Basic - pro forma                                                           $                0.70      $                 0.97

    Diluted - as reported                                                       $                0.70      $                 0.96
    Diluted - pro forma                                                         $                0.69      $                 0.95
</TABLE>



Earnings Per Share - Basic earnings per share excludes dilution and is computed
by dividing net income available to common stockholders by the weighted-average
number of shares of common stock outstanding for the period. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock or resulted in the issuance of common stock that then shared in the
earnings of the Company.

Cash Flows - Cash and cash equivalents are demand deposits and short-term
investments with a maturity of 90 days or less.

Recently Issued Accounting Standards - On March 9, 2004, the SEC issued SAB No.
105, which provides guidance regarding loan commitments that are accounted for
as derivative instruments under SFAS No. 133 (as amended), "Accounting for
Derivative Instruments and Hedging Activities". In SAB No. 105, the SEC stated
that the value of expected future cash flows related to servicing rights should
be excluded when determining the fair value of derivative interest rate lock
commitments. This guidance must be applied to rate locks initiated after March
31, 2004. Under the new policy, the value of the expected future cash flow
related to servicing rights is not recognized until the underlying loans are
sold. The impact that this new policy will have on the Company's results of
operations in the second quarter of 2004 will be influenced by that quarter's
amount of rate lock volume associated with loans expected to be sold and by the
timing of when loan sales are executed. The Company estimates that the second
quarter of 2004 results of operations will be diminished $34 million pre-tax by
its adoption of SAB No. 105. As rate lock volume is highly sensitive to changes
in interest rates and the timing of loan sales may be affected by market
conditions, the Company's actual results may be materially different from the
estimate of future results.


                                      -9-
<PAGE>

NOTE 2 - MORTGAGE-BACKED SECURITIES

The following table presents the Company's mortgage-backed securities as of
March 31, 2004 and December 31, 2003:

<TABLE>
<CAPTION>
                                                      March 31, 2004
                          -----------------------------------------------------------------------
(In thousands)            Trading Securities    Securities Available for Sale    Total Securities
                          ------------------    -----------------------------    ----------------
<S>                       <C>                   <C>                              <C>
Principal amount          $        1,091,714    $                   2,814,285    $      3,905,999
Unamortized premium                    4,244                           59,142              63,386
                          ------------------    -----------------------------    ----------------
Adjusted cost                      1,095,958                        2,873,427           3,969,385

Gross unrealized gains                22,181                           13,528              35,709
Gross unrealized losses                   --                           (2,015)             (2,015)
                          ------------------    -----------------------------    ----------------
Fair value                $        1,118,139    $                   2,884,940    $      4,003,079
                          ==================    =============================    ================


                                                     December 31, 2003
                          -----------------------------------------------------------------------
(In thousands)            Trading Securities    Securities Available for Sale    Total Securities
                          ------------------    -----------------------------    ----------------

Principal amount          $          473,424    $                   1,259,700    $      1,733,124
Unamortized premium                    3,117                           22,823              25,940
                          ------------------    -----------------------------    ----------------
Adjusted cost                        476,541                        1,282,523           1,759,064

Gross unrealized gains                 3,382                            1,969               5,351
Gross unrealized losses                 (110)                            (677)               (787)
                          ------------------    -----------------------------    ----------------
Fair value                $          479,813    $                   1,283,815    $      1,763,628
                          ==================    =============================    ================
</TABLE>

During the quarter ended March 31, 2004, the Company sold $789.6 million of
mortgage-backed securities and realized $9.4 million in gains and $879 thousand
in losses.

The Company's mortgage-backed securities with gross unrealized losses at March
31, 2004 have been in an unrealized loss position for less than two months.

The Company has credit exposure on loans it has securitized. The following table
summarizes the loan delinquency information as of March 31, 2004 and December
31, 2003:


<TABLE>
<CAPTION>
                                                   March 31, 2004
                          ---------------------------------------------------------------------
(in thousands)

Delinquency Status           Loan          Loan         Percent of Total       Percent of Total
                             Count       Balance         Securitizations            Assets
------------------------  ---------------------------------------------------------------------
<S>                               <C>      <C>                       <C>                 <C>
60 to 89 days                     7        $ 1,353                   0.10%               0.02%
                          ----------  -------------  ----------------------  ------------------
                                  7        $ 1,353                   0.10%               0.02%
                          ==========  =============  ======================  ==================
</TABLE>

                                      -10-
<PAGE>
<TABLE>
<CAPTION>
                                                   December 31, 2003
                          --------------------------------------------------------------------
(in thousands)

Delinquency Status           Loan          Loan         Percent of Total      Percent of Total
                             Count        Balance        Securitizations            Assets
------------------------  --------------------------------------------------------------------
<S>                               <C>        <C>                     <C>                <C>
60 to 89 days                     1          $ 692                   0.13%              0.02%
                          ----------  -------------  ---------------------- ------------------
                                  1          $ 692                   0.13%              0.02%
                          ==========  =============  ====================== ==================
</TABLE>

As of March 31, 2004 the Company had a payable for securities purchased of
$134.6 million of mortgage-backed securities.

NOTE 3 - MORTGAGE LOANS HELD FOR SALE, NET

The following table presents the Company's mortgage loans held for sale, net, as
of March 31, 2004 and December 31, 2003:

                                               March 31,     December 31,
(In thousands)                                    2004           2003
                                              -----------    -----------
Mortgage loans held for sale                  $ 1,330,349    $ 1,187,314
FAS 133 basis adjustments                          10,965         16,489
Deferred origination costs, net                    29,884         22,324
Forward delivery contracts                           (150)        (2,300)
                                              -----------    -----------

Mortgage loans held for sale, net             $ 1,371,048    $ 1,223,827
                                              ===========    ===========


NOTE 4 - DERIVATIVE ASSETS AND LIABILITIES

The following table presents the Company's derivative assets and liabilities as
of March 31, 2004 and December 31, 2003:

<TABLE>
<CAPTION>
                                                                   March 31,     December 31,
(In thousands)                                                       2004            2003
                                                                -------------   -------------
<S>                                                             <C>             <C>
Derivative Assets:
Interest rate lock commitments                                  $      24,151   $      20,837
                                                                -------------   -------------

Derivative assets                                               $      24,151   $      20,837
                                                                =============   =============

Derivative Liabilities:
Forward delivery contracts - loan commitments                   $         699   $       4,358
Forward delivery contracts - loans held for sale(1)                       150           2,300
Interest rate swaps                                                    20,596           6,036
                                                                -------------   -------------
Derivative liabilities                                          $      21,445   $      12,694
                                                                =============   =============
</TABLE>


(1) This amount is included in mortgage loans held for sale, net (see Note 3).

At March 31, 2004, the notional amount of forward delivery contracts and
interest rate swaps amounted to approximately $1.4 billion and $1.3 billion,
respectively. The forward delivery contracts have a high correlation to the
price movement of the loans being hedged. The ineffectiveness recognized in
hedging loans held for sale recorded on the balance sheet was insignificant as
of March 31, 2004.

                                      -11-
<PAGE>

NOTE 5 - MORTGAGE SERVICING RIGHTS, NET

The following table presents the activity in the Company's mortgage servicing
rights, net, for the three months ended March 31, 2004 and 2003:


                                              Three Months Ended March 31,
                                           ----------------------------------
(In thousands)                                        2004               2003
                                           ---------------    ---------------
Mortgage Servicing Rights:
Balance at beginning of period             $       121,652    $       119,225
Additions                                           15,665              5,832
Amortization                                        (7,346)           (12,769)
                                           ---------------    ---------------

Balance at end of period                   $       129,971    $       112,288
                                           ---------------    ---------------

Impairment Allowance:
Balance at beginning of period             $        (3,868)   $       (10,202)
Impairment provision                               (12,584)            (5,713)
                                           ---------------    ---------------

Balance at end of period                   $       (16,452)   $       (15,915)
                                           ---------------    ---------------

Mortgage servicing rights, net             $       113,519    $        96,373
                                           ===============    ===============



Aggregate Amortization Expense
------------------------------
   Three months ended March 31, 2004                    $    7,346

Estimated Amortization Expense
------------------------------
   Year ended March 31, 2005                                30,373
   Year ended March 31, 2006                                21,934
   Year ended March 31, 2007                                16,122
   Year ended March 31, 2008                                12,207
   Year ended March 31, 2009                                 9,469
                  Thereafter                                39,866


On a quarterly basis, the Company reviews MSRs for impairment based on risk
strata. The MSRs are stratified based on the predominant risk characteristics of
the underlying loans. The Company's predominant risk characteristic is interest
rate. A valuation allowance is recognized for MSRs that have an amortized
balance in excess of the estimated fair value for the individual risk
stratification.

The estimated fair value of MSRs is determined by obtaining a market valuation
from an independent MSR broker. To determine the market value of MSRs, the MSR
broker uses a valuation model which incorporates assumptions relating to the
estimate of the cost of servicing the loan, a discount rate, a float value, an
inflation rate, ancillary income per loan, prepayment speeds and default rates
that market participants use for similar MSRs. Market assumptions are held
constant over the life of the portfolio.

The significant assumptions used in estimating the fair value of MSRs at March
31, 2004 and December 31, 2003 were as follows:

                                           March 31, 2004    December 31, 2003
                                           --------------    -----------------
Weighted average prepayment speed (PSA)          573                 397
Weighted average discount rate                10.04%               9.82%
Weighted average default rate                  3.00%               4.02%

                                      -12-
<PAGE>

The following table presents certain information regarding the Company's
servicing portfolio of loans serviced for others at March 31, 2004 and December
31, 2003:

<TABLE>
<CAPTION>
                                                          March 31, 2004          December 31, 2003
                                                       ----------------------   ----------------------
                                                                   (Dollars in thousands)
<S>                                                    <C>                      <C>
Loan servicing portfolio - loans sold or securitized   $           8,956,144    $           8,272,294
Average loan size                                      $                 127    $                 120
Weighted average servicing fee                                         0.363%                   0.347%
Weighted average note rate                                              5.58%                    5.72%
Weighted average remaining term (in months)                              313                      298
Weighted average age (in months)                                          26                       27
</TABLE>


NOTE 6 - GOODWILL

The following table presents the activity in the Company's goodwill for the
three months ended March 31, 2004:

<TABLE>
<CAPTION>
(In thousands)                                                               Mortgage-Backed
                                                  Loan Origination         Securities Holdings
                                                       Segment                   Segment                   Total
                                                --------------------- ----------------------------- ---------------------
<S>                                             <C>                   <C>                           <C>
Balance at December 31, 2003                    $             58,605  $                   $ 24,840  $           $ 83,445
Earnouts from previous acquisitions                              307                             -                   307
                                                --------------------- ----------------------------- ---------------------
Balance at March 31, 2004                       $             58,912  $                   $ 24,840  $           $ 83,752
                                                ===================== ============================= =====================
</TABLE>


NOTE 7 - WAREHOUSE LINES OF CREDIT

As of March 31, 2004, the Company has a committed bank syndicated facility led
by Residential Funding Corporation ("RFC") and a pre-purchase facility with UBS
Real Estate Securities Inc. (formerly Paine Webber Real Estate Securities Inc.)
("UBS"). The Company also has committed facilities with CDC IXIS Capital Markets
North America Inc. ("CDC"), Morgan Stanley Bank ("Morgan Stanley") and Credit
Lyonnais. In addition, the Company has a gestation facility with Greenwich
Capital Financial Products, Inc. The RFC facility is for $450 million, the UBS
facility is for $1.2 billion, the CDC facility is for $450 million, the Morgan
Stanley facility is for $350 million, the Credit Lyonnais facility is for $200
million and the Greenwich Capital Market facility is for $200 million. The
interest rate on outstanding balances fluctuates daily based on a spread to the
LIBOR and interest is paid monthly.

The lines of credit are secured by mortgage loans and other assets of the
Company. The lines contain various covenants pertaining to maintenance of net
worth and working capital. At March 31, 2004, the Company was in compliance with
the loan covenants.

Included within the RFC line of credit, the Company has a working capital
sub-limit that allows for borrowings up to $35 million at a rate based on a
spread to the LIBOR that may be adjusted for earnings on compensating balances
on deposit at creditors' banks. As of March 31, 2004, borrowings under the
working capital line of credit were $26 million.


                                      -13-
<PAGE>


The following table presents the Company's warehouse lines of credit as of March
31, 2004 and December 31, 2003:

<TABLE>
<CAPTION>
                                                    March 31, 2004                    December 31, 2003
                                          ---------------------------------  -----------------------------------
                                                               Weighted                            Weighted
                                             Outstanding        Average         Outstanding         Average
(Dollars in thousands)                         Balance           Rate             Balance            Rate
                                          ---------------------------------  -----------------------------------

<S>                                       <C>                   <C>          <C>                       <C>
CDC                                       $         402,310     1.95 %       $          406,444        1.98 %
UBS                                                 376,764     3.12                    128,345        3.21
Credit Lyonnais                                     187,736     1.84                    200,702        1.88
Morgan Stanley                                      161,243     1.89                     92,925        1.92
RFC                                                 123,792     2.54                    293,344        2.06
                                          -----------------                  ------------------

Warehouse lines of credit                 $       1,251,845     2.34 %       $        1,121,760        2.12 %
                                          =================                  ==================
</TABLE>


NOTE 8 - REVERSE REPURCHASE AGREEMENTS

The Company has arrangements to enter into reverse repurchase agreements, a form
of collateralized short-term borrowing, with 13 different financial institutions
and on March 31, 2004 had borrowed funds from five of these firms. Because the
Company borrows money under these agreements based on the fair value of its
mortgage-backed securities, and because changes in interest rates can negatively
impact the valuation of mortgage-backed securities, the Company's borrowing
ability under these agreements could be limited and lenders could initiate
margin calls in the event interest rates change or the value of the Company's
mortgage-backed securities declines for other reasons.

As of March 31, 2004, the Company had $3.4 billion of reverse repurchase
agreements outstanding with a weighted-average borrowing rate of 1.24% and a
weighted-average remaining maturity of 4.4 months. As of December 31, 2003, the
Company had $1.3 billion of reverse repurchase agreements outstanding with a
weighted-average borrowing rate of 1.26% and a weighted-average remaining
maturity of 6.9 months.

At March 31, 2004 and December 31, 2003, the reverse repurchase agreements had
the following remaining maturities:


                                       March 31,              December 31,
                                          2004                    2003
                                  ---------------------   --------------------
                                                (In thousands)
Within 30 days                    $          1,062,719    $            184,302
31 to 89 days                                  544,442                       -
90 to 365 days                               1,787,780               1,160,025
                                  --------------------    --------------------
Reverse repurchase agreements     $          3,394,941    $          1,344,327
                                  ====================    ====================

                                      -14-
<PAGE>

NOTE 9 - EARNINGS PER SHARE

The following is a reconciliation of the denominators used in the computations
of basic and diluted earnings per share for the three months ended March 31,
2004 and 2003:

<TABLE>
<CAPTION>
                                                                  Three Months Ended March 31,
                                                              ------------------------------------
(Dollars in thousands, except per share amounts)                    2004               2003
                                                              ------------------ -----------------

<S>                                                           <C>                <C>
Numerator for basic earnings per share - Net income           $          21,223  $         16,313
                                                              =================  ================

Denominator:
  Denominator for basic earnings per share
  Weighted average number of common shares
    outstanding during the period                                    30,030,248        16,750,960

  Net effect of dilutive stock options                                  477,570           264,721
                                                              -----------------  ----------------

Denominator for diluted earnings per share                           30,507,818        17,015,681
                                                              =================  ================

Net income per share:

     Basic                                                    $            0.71  $           0.97
                                                              =================  ================
    Diluted                                                   $            0.70  $           0.96
                                                              =================  ================
</TABLE>


NOTE 10 - STOCK OPTION PLANS

In 1999, the Company established the 1999 Omnibus Stock Incentive Plan, as
amended (the "Plan"). Pursuant to the Plan, eligible employees, officers and
directors are offered the opportunity to acquire the Company's common stock
through the grant of options and the award of restricted stock under the Plan.
The total number of shares that may be optioned or awarded under the Plan is
3,000,000 shares of common stock. The Plan provides for the granting of options
at the fair market value on the date of grant. The options issued primarily vest
50% on the two-year anniversary of the grant date and 50% on the three-year
anniversary of the grant date, and expire ten years from the grant date.

As of March 31, 2004, the Company has awarded 182,259 shares of restricted stock
under the Plan. During the quarters ended March 31, 2004 and 2003, the Company
recognized compensation expense of $188 thousand and $123 thousand,
respectively, relating to shares of restricted stock. At March 31, 2004, 96,799
shares are vested. In general, unvested restricted stock is forfeited upon the
recipient's termination of employment.

The Plan is a compensatory stock option plan. There was no intrinsic value of
the options when granted, as the exercise price was equal to the quoted market
price at the grant date. No compensation cost has been recognized for the three
months ended March 31, 2004 and 2003.

Pursuant to the terms of the Company's merger with Apex, which was consummated
on December 3, 2003 (following the approval of the Company's stockholders at a
special meeting held on November 21, 2003), the Company assumed the Amended and
Restated 1997 Stock Option Plan of Apex (the "Apex Plan"). On the date that
Apex's stockholders approved the merger, Apex caused all unvested options
granted under the Apex Plan to become vested, and each option granted under the
Apex Plan that was not exercised as of December 3, 2003 was terminated and not
assumed by the Company.

An aggregate of 1 million shares of common stock were available for issuance
upon exercise of stock options granted under the Apex Plan. As of the effective
date of the merger, Apex had granted options to purchase 791,000 shares of
common stock, which options were either (i) previously caused to become vested
or (ii) terminated and not assumed by the Company. Accordingly, options to
purchase an aggregate of 209,000 shares of the Company's common stock remain
available for grant under the Apex Plan.

                                      -15-
<PAGE>

The weighted-average fair value per share of options granted during the three
months ended March 31, 2004 was $5.62. There were no options granted during the
three months ended March 31, 2003. The fair value of the options granted is
estimated using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for the grants:


                            Three Months Ended
                              March 31, 2004
                            ------------------

Dividend yield                    7.0 %
Expected volatility              49.0 %
Risk-free interest rate           5.0 %
Expected life                   3 years


NOTE 11 - ACQUISITIONS

Apex Mortgage Capital, Inc.

On December 3, 2003, AHM Holdings completed its merger with Apex, a Maryland
corporation that operated and elected to be treated as a REIT. Immediately prior
to the merger, under the terms of the reorganization agreement between AHM
Holdings and AHM Investment, AHM Holdings reorganized through a reverse
triangular merger that caused AHM Investment, a newly formed Maryland
corporation that operates and will elect to be treated as a REIT for federal
income tax purposes, to become AHM Holdings' parent. AHM Investment issued
7,691,862 shares to former Apex stockholders in the merger valued at $177.3
million.

The following table summarizes the required disclosures of the pro forma
combined entity, as if the acquisition occurred at the beginning of the year for
the three months ended March 31, 2003:


                                                    Three Months Ended
                                                 -------------------------
(In thousands, except per share amounts)              March 31, 2003
                                                 -------------------------

Revenue                                          $                 102,541

Income before income taxes                                          34,189


Net income                                       $                  22,612
                                                 =========================

Earnings per share - basic                       $                    0.93
                                                 =========================

Earnings per share - diluted                     $                    0.92
                                                 =========================


Valley Bancorp, Inc.

In August 2001, AHM Holdings entered into an agreement to acquire Valley
Bancorp, Inc. ("Valley Bancorp") and its wholly-owned subsidiary, Valley Bank of
Maryland ("Valley Bank"), a federal savings bank located in suburban Baltimore,
Maryland, for a combination of cash and stock, subject to certain adjustments.
Under the terms of the definitive agreement, the Company will pay 1.25 times
Valley Bancorp's book value, or approximately $5.8 million. The acquisition
agreement between AHM Holdings and Valley Bancorp has been extended through July
31, 2004. This transaction is subject to regulatory approval and no assurance
can be given that such approval will be obtained or that the acquisition
agreement with Valley Bancorp will be further extended if necessary.

                                      -16-
<PAGE>

NOTE 12 - SEGMENTS AND RELATED INFORMATION

The Company has three segments, the Mortgage-Backed Securities Holdings segment,
the Loan Origination segment and the Loan Servicing segment. The Mortgage-Backed
Securities Holdings segment uses the Company's equity capital and borrowed funds
to invest in mortgage-backed securities, thereby producing net interest income.
The Loan Origination segment originates mortgage loans through the Company's
retail and internet branches and loans sourced through mortgage brokers
(wholesale channel). The Loan Servicing segment includes investments in mortgage
servicing rights as well as servicing operations primarily for other financial
institutions.

The Mortgage-Backed Securities Holdings segment includes realized gains or
losses on sales of mortgage-backed securities and unrealized mark-to-market
gains or losses subsequent to the securitization date on mortgage-backed
securities classified as trading securities.

The Loan Origination segment includes unrealized gains or losses that exist on
the date of securitization of self-originated loans that are classified as
trading securities.

                                      -17-
<PAGE>

<TABLE>
<CAPTION>
                                                                       Three Months Ended March 31, 2004
                                                 --------------------------------------------------------------------------------
                                                                                (in thousands)
                                                   Mortgage-Backed
                                                     Securities        Loan Origination     Loan Servicing
                                                  Holdings Segment          Segment             Segment              Total
                                                 --------------------------------------------------------------------------------
<S>                                              <C>                   <C>                  <C>                    <C>
Net interest income:
Interest income                                  $            15,149   $          18,901    $              -       $      34,050
Interest expense                                              (9,412)            (10,962)               (904)            (21,278)
                                                 --------------------------------------------------------------------------------
   Total net interest income                                   5,737               7,939                (904)             12,772
                                                 --------------------------------------------------------------------------------

Non-interest income:
Gain on sales of mortgage loans and
   mortgage-backed securities                                 12,651              67,482                   -              80,133

Loan servicing fees                                                -                   -              10,318              10,318
Amortization                                                       -                   -              (7,346)             (7,346)
Impairment reserve provision                                       -                   -             (12,584)            (12,584)
                                                 --------------------------------------------------------------------------------
   Net loan servicing fees (loss)                                  -                   -              (9,612)             (9,612)

Other non-interest income                                          -                 978                   -                 978
                                                 --------------------------------------------------------------------------------
   Total non-interest income                                  12,651              68,460              (9,612)             71,499
                                                 --------------------------------------------------------------------------------



Non-interest expenses:
   Salaries, commissions and benefits, net                        50              38,600               1,132              39,782
   Occupancy and equipment                                         -               7,935                 159               8,094
   Data processing and communications                              2               3,181                  30               3,213
   Office supplies and expenses                                    -               2,747                 371               3,118
   Marketing and promotion                                         -               2,212                   -               2,212
   Travel and entertainment                                        2               2,462                 113               2,577
   Professional fees                                              71               2,213                 144               2,428
   Other                                                       1,045               3,324               1,069               5,438
                                                 --------------------------------------------------------------------------------
      Total non-interest expenses                              1,170              62,674               3,018              66,862
                                                 --------------------------------------------------------------------------------

Net income before income tax expense (benefit)                17,218              13,725             (13,534)             17,409
                                                 --------------------------------------------------------------------------------

Income tax expense (benefit)                                       -               1,735              (5,549)             (3,814)

                                                 --------------------------------------------------------------------------------
Net income                                       $            17,218   $          11,990    $         (7,985)      $      21,223
                                                 ================================================================================

                                                                                 March 31, 2004
                                                 --------------------------------------------------------------------------------

Segment assets                                           $ 4,074,086   $       1,613,620    $        139,273       $   5,826,979
                                                 ================================================================================
</TABLE>

                                      -18-
<PAGE>
<TABLE>
<CAPTION>
                                                                        Three Months Ended March 31, 2003
                                                 --------------------------------------------------------------------------------
                                                                                  (in thousands)
                                                   Mortgage-Backed
                                                     Securities        Loan Origination     Loan Servicing
                                                  Holdings Segment          Segment             Segment              Total
                                                 --------------------------------------------------------------------------------
<S>                                              <C>                   <C>                  <C>                    <C>
Net interest income:
Interest income                                  $                 -   $          20,976    $              2       $      20,978
Interest expense                                                   -              (9,421)               (788)            (10,209)
                                                 --------------------------------------------------------------------------------
   Total net interest income                                       -              11,555                (786)             10,769
                                                 --------------------------------------------------------------------------------
Non-interest income:
Gain on sales of mortgage loans                                    -              88,211                   -              88,211

Loan servicing fees                                                -                   -              11,128              11,128
Amortization                                                       -                   -             (12,769)            (12,769)
Impairment reserve provision                                       -                   -              (5,713)             (5,713)
                                                 --------------------------------------------------------------------------------
Net loan servicing fees (loss)                                     -                   -              (7,354)             (7,354)

Other non-interest income                                          -               2,928                   -               2,928
                                                 --------------------------------------------------------------------------------
   Total non-interest income                                       -              91,139              (7,354)             83,785
                                                 --------------------------------------------------------------------------------


Non-interest expenses:
   Salaries, commissions and benefits, net                         -              43,841                 806              44,647
   Occupancy and equipment                                         -               5,492                 131               5,623
   Data processing and communications                              -               3,052                  27               3,079
   Office supplies and expenses                                    -               2,664                 359               3,023
   Marketing and promotion                                         -               2,797                   2               2,799
   Travel and entertainment                                        -               1,986                   1               1,987
   Professional fees                                               -               1,709                 132               1,841
   Other                                                           -               3,259                 406               3,665
                                                 --------------------------------------------------------------------------------
      Total non-interest expenses                                  -              64,800               1,864              66,664
                                                 --------------------------------------------------------------------------------

Net income before income tax expense (benefit)                     -              37,894             (10,004)             27,890
                                                 --------------------------------------------------------------------------------

Income tax expense (benefit)                                       -              15,584              (4,007)             11,577

                                                 --------------------------------------------------------------------------------
Net income                                                       $ -   $          22,310    $         (5,997)      $      16,313
                                                 ================================================================================

                                                                                 December 31, 2003
                                                 --------------------------------------------------------------------------------

Segment assets                                   $         1,865,414   $        1,372,976   $         164,000      $    3,402,390
                                                 ================================================================================
</TABLE>

                                      -19-
<PAGE>

NOTE 13 - RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to the issuance of the Company's financial statements for the quarter
ended March 31, 2004, the Company determined it had improperly classified cash
flows related to certain securitization and mortgage-backed securities holding
activities as cash flows from investing activities rather than cash flows from
operating activities. As a result, adjustments were recorded to properly
classify sources and uses of cash in operating and investing activities with the
most significant adjustment to properly classify cash used for purchases and
additions to mortgage-backed securities of approximately $972 million and cash
proceeds from sales of mortgage-backed securities of approximately $92 million
from cash flows from investing activities to cash flows from operating
activities for the quarter ended March 31, 2004. Certain reclassifications in
the quarterly cash flow statement for the first quarter of 2004 have been made
to conform the previously issued cash flow statement to the current
presentation.

The following table presents the significant effects of the restatement:

<TABLE>
<CAPTION>
                                                                        Three Months Ended
                                                                          March 31, 2004
                                                                 -------------------------------
(In thousands)                                                   (As previously
                                                                    reported)      (As restated)
                                                                 -------------------------------
<S>                                                              <C>               <C>
Cash flows from operating activities:
Adjustments to reconcile net income to net cash
  used in operating activities:
Deferred cash flow hedge gain, net of amortization               $           --    $         415
Gain on sales of mortgage-backed securities and derivatives                  --           (6,705)
Unrealized gain on mortgage-backed securities                           (18,909)         (10,217)
Capitalization of mortgage servicing rights                             (15,665)              --
Additions to mortgage servicing rights on securitized loans                  --           (9,863)
Additions to mortgage servicing rights on sold loans                         --           (5,802)
Increase in interest rate lock commitments                                   --           (9,990)
Increase in deferred origination costs                                       --             (884)
Decrease in SFAS No. 133 basis adjustments                                   --            5,524
Other                                                                        60           (2,504)
Increase in derivative assets                                            (3,314)              --
Increase (decrease) in operating liabilities:
   Accrued expenses and other liabilities                               (10,656)          (8,092)
   Forward delivery contracts                                                --           (5,809)
   Derivative liabilities                                                (3,245)              --
Proceeds from sales and securitizations of mortgage loans             4,265,953               --
Proceeds from sales and repayments of mortgage loans                         --        3,292,010
Proceeds from securitizations and repayments of mortgage loans               --          969,436
Additions to mortgage-backed securities                                      --         (897,322)
Proceeds from sales of mortgage-backed securities                            --           23,861
Principal repayments of mortgage-backed securities                           --           13,734
       Net cash used in operating activities                           (160,393)      (1,026,825)

Cash flows from investing activities:
Purchases and additions to mortgage-backed securities                (3,066,588)              --
Purchases of mortgage-backed securities                                      --       (2,094,101)
Proceeds from sales of mortgage-backed securities                       789,589          697,268
Principal repayments of mortgage-backed securities                       63,719           49,985
       Net cash used in investing activities                         (2,215,106)      (1,348,674)
</TABLE>


                                      -20-
<PAGE>

                                     ITEM 2.

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

This Management's Discussion and Analysis reflects the restatement of our
consolidated statement of cash flows, as discussed in Note 13 to the
consolidated financial statements.

Regarding Forward-Looking Statements

This report, including, but not limited to, "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contains certain
forward-looking statements within the meaning of the federal securities laws.
Some of the forward-looking statements can be identified by the use of
forward-looking words. When used in this report, statements which are not
historical in nature, including the words "anticipate," "may," "estimate,"
"should," "seek," "expect," "plan," "believe," "intend," and similar words, or
the negatives of those words, are intended to identify forward-looking
statements. Statements which also contain a projection of revenues, earnings
(loss), capital expenditures, dividends, capital structure or other financial
terms are intended to be forward-looking statements. Certain statements
regarding the following particularly are forward-looking in nature:

   o  our business strategy;

   o  future performance, developments, market forecasts or projected dividends;

   o  projected acquisitions or joint ventures; and

   o  projected capital expenditures.

It is important to note that the description of our business in general, and our
mortgage-backed securities holdings in particular, is a statement about our
operations as of a specific point in time. It is not meant to be construed as an
investment policy, and the types of assets we hold, the amount of leverage we
use, the liabilities we incur and other characteristics of our assets and
liabilities are subject to reevaluation and change without notice.

The forward-looking statements in this report are based on our management's
beliefs, assumptions, and expectations of our future economic performance,
taking into account the information currently available to it. These statements
are not statements of historical fact. Forward-looking statements are subject to
a number of factors, risks and uncertainties, some of which are not currently
known to us, that may cause our actual results, performance or financial
condition to be materially different from the expectations of future results,
performance or financial position. These factors include, without limitation:

   o  our limited operating history with respect to our proposed portfolio
      strategy;

   o  our proposed portfolio strategy may be changed or modified by our
      management without advance notice to stockholders, and that we may suffer
      losses as a result of such modifications or changes;

   o  our need for a significant amount of cash to operate our business;

   o  risks associated with the use of leverage;

   o  disruptions in the market for repurchase facilities;

   o  failure to match the interest rates on our borrowings with the interest
      rates on the mortgage-backed securities we hold;

   o  failure to maintain our status as a real estate investment trust;

   o  changes in federal and state tax laws affecting real estate investment
      trusts;

   o  general economic, political, market, financial or legal conditions; and

                                      -21-
<PAGE>

   o  the other factors referenced in this report, including, without
      limitation, those under the caption "Management's Discussion and Analysis
      of Financial Condition and Results of Operations."

In light of these risks, uncertainties and assumptions, any forward-looking
events discussed in this report might not occur, and we qualify any and all of
our forward-looking statements entirely by these cautionary factors. You are
cautioned not to place undue reliance on forward-looking statements. Such
forward-looking statements are inherently uncertain, and actual results may
differ from expectations.

We are not under any obligation, and we expressly disclaim any obligation, to
update or alter any forward-looking statements, whether as a result of new
information, future events or otherwise.


Critical Accounting Policies and Estimates

Our accounting policies are described in Note 1 to the Consolidated Financial
Statements. We have identified the following accounting policies that are
critical to the presentation of our financial statements and that require
critical accounting estimates by management.

Mortgage-Backed Securities - We record our mortgage-backed securities at fair
value. The fair values of our mortgage-backed securities are generally based on
market prices provided by certain dealers who make markets on these financial
instruments or third-party pricing services. If the fair value of a
mortgage-backed security is not reasonably available, management estimates the
fair value, which requires management's judgment and may not be indicative of
the amounts we could realize in a current market exchange.

Mortgage Loans Held for Sale - The hedged mortgage loans held for sale are
carried at the lower of cost or aggregate market value. The cost basis includes
the capitalized value of the IRLCs related to the mortgage loans and any net
deferred origination costs. For mortgage loans held for sale that are hedged
with forward sale commitments, the carrying value is adjusted for the change in
market during the time the hedge was deemed to be highly effective. The market
value is determined by outstanding commitments from investors or current yield
requirements calculated on an aggregate basis.

Mortgage Servicing Rights - When we acquire servicing assets through either
purchase or origination of loans and sell or securitize those loans with
servicing assets retained, the total cost of the loans is allocated to the
servicing assets and the loans (without the servicing assets) based on their
relative fair values. The amount attributable to the servicing assets is
capitalized as MSRs on the consolidated balance sheets. The MSRs are amortized
to expense in proportion to and over the period of estimated net servicing
income.

The MSRs are assessed for impairment based on the fair value of those assets. We
estimate the fair value of the servicing assets by obtaining market information
from a primary mortgage servicing rights broker. When the book value of
capitalized servicing assets exceeds their fair value, impairment is recognized
through a valuation allowance. In determining impairment, the mortgage servicing
portfolio is stratified by the predominant risk characteristic of the underlying
mortgage loans. We have determined that the predominant risk characteristic is
the interest rate on the underlying loan. We measure impairment for each stratum
by comparing the estimated fair value to the recorded book value. Temporary
impairment is recorded through a valuation allowance and amortization expense in
the period of occurrence. In addition, we periodically evaluate our MSRs for
other than temporary impairment to determine if the carrying value before the
application of the valuation allowance is recoverable. We receive a sensitivity
analysis of the estimated fair value of our MSRs assuming a 200-basis-point
instantaneous increase in interest rates from an independent mortgage servicing
rights broker. The fair value estimate includes changes in market assumptions
that would be expected given the increase in mortgage rates (e.g., prepayment
speeds would be lower). We believe this 200-basis-point increase in mortgage
rates to be an appropriate threshold for determining the recoverability of the
temporary impairment because that size rate increase is foreseeable and
consistent with historical mortgage rate fluctuations. When using this
instantaneous change in rates, if the fair value of the strata of MSRs is
estimated to increase to a point where all of the impairment would be recovered,
the impairment is considered to be temporary. When we determine that a portion
of the MSRs is not recoverable, the related MSRs and the previously established
valuation allowance are correspondingly reduced to reflect other than temporary
impairment.

Derivative Assets and Derivative Liabilities - Our mortgage-committed pipeline
includes IRLCs that have been extended to borrowers who have applied for loan
funding and meet certain defined credit and underwriting criteria. IRLCs are
recorded at fair value with changes in fair value recorded to current earnings.
The fair value of the IRLCs is determined by an estimate of the ultimate gain on
sale of the loans, including the value of MSRs, net of estimated net costs
remaining to originate the loan. In March 2004, the SEC issued SAB No. 105,
which provides industry guidance that will change the timing of recognition of
MSRs for IRLCs initiated after March 31, 2004. See "Recently Issued Accounting
Standards" in Note 1 to the Consolidated Financial Statements.

We use other derivative instruments, including mortgage forward delivery
contracts and treasury futures options, to economically hedge the IRLCs, which
are also classified and accounted for as free-standing derivatives and thus are
recorded at fair value with the changes in fair value recorded to current
earnings.

                                      -22-
<PAGE>

We use mortgage forward delivery contracts designated as fair value hedging
instruments to hedge 100% of our agency-eligible conforming fixed-rate loans and
most of our non-conforming fixed-rate loans held for sale. At the inception of
the hedge, we formally

document the relationship between the forward delivery contracts and the
mortgage inventory, as well as our objective and strategy for undertaking the
hedge transactions. In the case of our conventional conforming fixed rate loan
products, the notional amount of the forward delivery contracts, along with the
underlying rate and terms of the contracts, are equivalent to the unpaid
principal amount of the mortgage inventory being hedged; hence, the forward
delivery contracts effectively fix the forward sales price and thereby
substantially eliminate interest rate and price risk to us. We classify and
account for these forward delivery contracts as fair value hedges. The
derivatives are carried at fair value with the changes in fair value recorded to
current earnings. When the hedges are deemed to be highly effective, the book
value of the hedged loans held for sale is adjusted for its change in fair value
during the hedge period.

We enter into interest rate swap agreements to manage our interest rate exposure
when financing our adjustable-rate mortgage loans and mortgage-backed
securities. The swap agreements are accounted for as cash flow hedges and
carried on the balance sheet at fair value. The fair values of our swap
agreements are generally based on market prices provided by certain dealers who
make markets on these financial instruments or third-party pricing services. If
the fair value of a trading security is not reasonably available, management
estimates the fair value, which requires management's judgment and may not be
indicative of the amounts we could realize in a current market exchange.

Goodwill - Goodwill represents the excess purchase price over the fair value of
net assets stemming from business acquisitions, including identifiable
intangibles. We test for impairment by comparing the fair value of goodwill, as
determined by using a discounted cash flow method, with its carrying value. Any
excess of carrying value over the fair value of the goodwill would be recognized
as an impairment loss in continuing operations. The discounted cash flow
calculation related to our loan origination segment includes a forecast of the
expected future loan originations and the related revenues and expenses. The
discounted cash flow calculation related to our Mortgage-Backed Securities
Holdings segment includes a forecast of the expected future net interest income,
gain on mortgage-backed securities and the related revenues and expenses. These
cash flows are discounted using a rate that is estimated to be a
weighted-average cost of capital for similar companies. We further test to
ensure that the fair value of all our business units does not exceed our total
market capitalization.

                                      -23-
<PAGE>

Financial Condition

At March 31, 2004, 68.7% of our total assets were mortgage-backed securities and
23.5% were mortgage loans held for sale, compared to 51.8% and 36.0%,
respectively, at December 31, 2003.

Total assets increased $2.4 billion to $5.8 billion at March 31, 2004 from $3.4
billion at December 31, 2003. The increase primarily reflects an increase in
mortgage-backed securities of $2.2 billion and a $0.1 billion rise in mortgage
loans held for sale. The growth in mortgage-backed securities was primarily
funded by an increase in reverse repurchase agreements of $2.1 billion. The
increase in loans held for sale was funded by a $0.1 billion rise in warehouse
lines of credit.

The following table summarizes our mortgage-backed securities owned at March 31,
2004 and December 31, 2003, classified by type of issuer and by ratings
categories:

<TABLE>
<CAPTION>
                                                                          March 31, 2004
                                 --------------------------------------------------------------------------------------------------
                                       Trading Securities          Securities Available for Sale                  Total
                                 ------------------------------    ------------------------------    ------------------------------
                                                                      (Dollars in thousands)

                                 Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix
                                 --------------   -------------    --------------   -------------    --------------   -------------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>

Agency securities                $      614,219            54.9%   $      935,458            32.4%   $    1,549,677            38.7%

Privately issued:
   AAA                                  160,474            14.4         1,858,699            64.4         2,019,173            50.4
   AA                                   330,699            29.6            34,027             1.2           364,726             9.1
   A                                      6,277             0.5            21,287             0.7            27,564             0.7
   BBB                                        -               -            10,867             0.4            10,867             0.3
  Unrated (1)                             6,470             0.6            24,602             0.9            31,072             0.8
                                 --------------   -------------    --------------   -------------    --------------   -------------
Total                            $    1,118,139           100.0%   $    2,884,940           100.0%   $    4,003,079           100.0%
                                 ==============   =============    ==============   =============    ==============   =============
</TABLE>

(1) Unrated subordinated certificates retained by the Company as credit
enhancements for its privately issued securities.


<TABLE>
<CAPTION>
                                                                        December 31, 2003
                                 --------------------------------------------------------------------------------------------------
                                       Trading Securities          Securities Available for Sale                  Total
                                 ------------------------------    ------------------------------    ------------------------------
                                                                      (Dollars in thousands)

                                 Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix
                                 --------------   -------------    --------------   -------------    --------------   -------------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>

Agency securities                $      287,577            60.0%   $      713,790            55.6%   $    1,001,367            56.8%

Privately issued:
   AAA                                  167,974            35.0           570,025            44.4           737,999            41.8
   AA                                    11,322             2.4                 -               -            11,322             0.6
   A                                      6,470             1.3                 -               -             6,470             0.4
  Unrated (1)                             6,470             1.3                 -               -             6,470             0.4
                                 --------------   -------------    --------------   -------------    --------------   -------------
Total                            $      479,813           100.0%   $    1,283,815           100.0%   $    1,763,628           100.0%
                                 ==============   =============    ==============   =============    ==============   =============
</TABLE>

(1) An unrated subordinated certificate retained by the Company as a credit
enhancement for its privately issued securities.

                                      -24-
<PAGE>

The following table classifies our mortgage-backed securities portfolio by type
of interest rate index at March 31, 2004 and December 31, 2003:


<TABLE>
<CAPTION>
                                                                          March 31, 2004
                                 --------------------------------------------------------------------------------------------------
                                       Trading Securities          Securities Available for Sale                  Total
                                 ------------------------------    ------------------------------    ------------------------------
                                                                      (Dollars in thousands)

                                 Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix
                                 --------------   -------------    --------------   -------------    --------------   -------------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>

Index:
One-month LIBOR                  $      312,162            27.9%   $      108,486             3.8%   $      420,648            10.5%
Six-month LIBOR                         191,906            17.2         1,239,865            43.0         1,431,771            35.8
One-year LIBOR                          593,901            53.1         1,207,428            41.9         1,801,329            45.0
One-year constant maturity
  treasury                               20,170             1.8           329,161            11.3           349,331             8.7
                                 --------------   -------------    --------------   -------------    --------------   -------------
Total                            $    1,118,139           100.0%   $    2,884,940           100.0%   $    4,003,079           100.0%
                                 ==============   =============    ==============   =============    ==============   =============
</TABLE>


<TABLE>
<CAPTION>
                                                                        December 31, 2003
                                 --------------------------------------------------------------------------------------------------
                                       Trading Securities          Securities Available for Sale                  Total
                                 ------------------------------    ------------------------------    ------------------------------
                                                                      (Dollars in thousands)

                                 Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix
                                 --------------   -------------    --------------   -------------    --------------   -------------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>

Index:
One-month LIBOR                  $      189,772            39.6%         $-              -%          $      189,772            10.8%
Six-month LIBOR                               -               -           517,248            40.3           517,248            29.3
One-year LIBOR                          261,548            54.5           610,963            47.6           872,511            49.5
One-year constant maturity
  treasury                               28,493             5.9           155,604            12.1           184,097            10.4
                                 --------------   -------------    --------------   -------------    --------------   -------------
Total                            $      479,813           100.0%   $    1,283,815           100.0%   $    1,763,628           100.0%
                                 ==============   =============    ==============   =============    ==============   =============
</TABLE>

                                      -25-
<PAGE>

The following table classifies our mortgage-backed securities portfolio by
product type at March 31, 2004 and December 31, 2003:


<TABLE>
<CAPTION>
                                                                          March 31, 2004
                                 --------------------------------------------------------------------------------------------------
                                       Trading Securities          Securities Available for Sale                  Total
                                 ------------------------------    ------------------------------    ------------------------------
                                                                      (Dollars in thousands)

                                 Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix
                                 --------------   -------------    --------------   -------------    --------------   -------------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>

Product:
1 month ARM                      $      184,200            16.5%         $-              -%          $      184,200             4.6%
6 month ARM                                   -               -           577,013            20.0           577,013            14.4
1 x 1 ARM                               127,961            11.4           184,098             6.4           312,059             7.8
3/1 Hybrid ARM                          418,082            37.4           640,850            22.2         1,058,932            26.5
5/1 Hybrid ARM                          387,896            34.7         1,482,979            51.4         1,870,875            46.7
                                 --------------   -------------    --------------   -------------    --------------   -------------
Total                            $    1,118,139           100.0%   $    2,884,940           100.0%   $    4,003,079           100.0%
                                 ==============   =============    ==============   =============    ==============   =============
</TABLE>


<TABLE>
<CAPTION>
                                                                        December 31, 2003
                                 --------------------------------------------------------------------------------------------------
                                       Trading Securities          Securities Available for Sale                  Total
                                 ------------------------------    ------------------------------    ------------------------------
                                                                      (Dollars in thousands)

                                 Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix    Carrying Value   Portfolio Mix
                                 --------------   -------------    --------------   -------------    --------------   -------------
<S>                              <C>              <C>              <C>              <C>              <C>              <C>

Product:
1 month ARM                      $      189,771            39.6%              $ -        - %         $      189,771            10.8%
6 month ARM                                   -               -           182,559            14.2           182,559            10.4
1 x 1 ARM                                      -               -            30,338             2.4            30,338             1.7
3/1 Hybrid ARM                          133,019            27.7           415,674            32.4           548,693            31.1
5/1 Hybrid ARM                          133,140            27.7           619,688            48.2           752,828            42.6
7/1 Hybrid ARM                           23,883             5.0            35,556             2.8            59,439             3.4
                                 --------------   -------------    --------------   -------------    --------------   -------------
Total                            $      479,813           100.0%   $    1,283,815           100.0%   $    1,763,628           100.0%
                                 ==============   =============    ==============   =============    ==============   =============
</TABLE>

During the quarter ended March 31, 2004, we purchased $2.1 billion of
mortgage-backed securities and added $1.0 billion of self-originated
mortgage-backed securities.

During the quarter ended March 31, 2004, we sold $789.6 million of
mortgage-backed securities.

The average cost basis of our mortgage-backed securities, excluding unrealized
gains and losses, was 101.6% of par as of March 31, 2004 and 101.5% of par as of
December 31, 2003.

We had payables for securities purchased of $134.6 million and $259.7 million as
of March 31, 2004 and December 31, 2003, respectively.

As of May 6, 2004, we held $5.4 billion of mortgage-backed securities and we
project our mortgage-backed securities to reach approximately $6.5 billion by
June 30, 2004.


                                      -26-
<PAGE>

Results of Operations - Comparison of the Three Months Ended March 31, 2004 and
2003

<TABLE>
<CAPTION>
                                                                      Three Months Ended March 31, 2004
                                                 ------------------------------------------------------------------------
                                                                              (in thousands)
                                                   Mortgage-Backed
                                                 Securities Holdings    Loan Origination    Loan Servicing
                                                  Holdings Segment          Segment            Segment           Total
                                                 -------------------    ----------------    --------------    -----------
<S>                                              <C>                    <C>                 <C>               <C>
Net interest income:
Interest income                                  $            15,149    $         18,901               $ -    $    34,050
Interest expense                                              (9,412)            (10,962)             (904)       (21,278)
                                                 ------------------------------------------------------------------------
   Total net interest income                                   5,737               7,939              (904)        12,772
                                                 ------------------------------------------------------------------------

Non-interest income:
Gain on sales of mortgage loans and
   mortgage-backed securities                                 12,651              67,482                 -         80,133

Loan servicing fees                                                -                   -            10,318         10,318
Amortization                                                       -                   -            (7,346)        (7,346)
Impairment reserve provision                                       -                   -           (12,584)       (12,584)
                                                 ------------------------------------------------------------------------
   Net loan servicing fees (loss)                                  -                   -            (9,612)        (9,612)

Other non-interest income                                          -                 978                 -            978
                                                 ------------------------------------------------------------------------
   Total non-interest income                                  12,651              68,460            (9,612)        71,499
                                                 ------------------------------------------------------------------------


Non-interest expenses:
   Salaries, commissions and benefits, net                        50              38,600             1,132         39,782
   Occupancy and equipment                                         -               7,935               159          8,094
   Data processing and communications                              2               3,181                30          3,213
   Office supplies and expenses                                    -               2,747               371          3,118
   Marketing and promotion                                         -               2,212                 -          2,212
   Travel and entertainment                                        2               2,462               113          2,577
   Professional fees                                              71               2,213               144          2,428
   Other                                                       1,045               3,324             1,069          5,438
                                                 ------------------------------------------------------------------------
      Total non-interest expenses                              1,170              62,674             3,018         66,862
                                                 ------------------------------------------------------------------------

Net income before income tax expense (benefit)                17,218              13,725           (13,534)        17,409
                                                 ------------------------------------------------------------------------

Income tax expense (benefit)                                       -               1,735            (5,549)        (3,814)

                                                 ------------------------------------------------------------------------
Net income                                       $            17,218    $         11,990    $       (7,985)   $    21,223
                                                 ========================================================================

                                                                              March 31, 2004
                                                 ------------------------------------------------------------------------

Segment assets                                   $         4,074,086    $      1,613,620    $      139,273    $ 5,826,979
                                                 ========================================================================
</TABLE>

                                      -27-
<PAGE>

<TABLE>
<CAPTION>
                                                                      Three Months Ended March 31, 2003
                                                 ------------------------------------------------------------------------
                                                                              (in thousands)
                                                   Mortgage-Backed
                                                 Securities Holdings    Loan Origination    Loan Servicing
                                                   Holdings Segment         Segment            Segment           Total
                                                 --------------------   ----------------    --------------    -----------
<S>                                              <C>                    <C>                 <C>               <C>
Net interest income:
Interest income                                  $                  -   $         20,976    $            2    $    20,978
Interest expense                                                    -             (9,421)             (788)       (10,209)
                                                 ------------------------------------------------------------------------
   Total net interest income                                        -             11,555              (786)        10,769
                                                 ------------------------------------------------------------------------

Non-interest income:
Gain on sales of mortgage loans                                     -             88,211                 -         88,211

Loan servicing fees                                                 -                  -            11,128         11,128
Amortization                                                        -                  -           (12,769)       (12,769)
Impairment reserve provision                                        -                  -            (5,713)        (5,713)
                                                  ------------------------------------------------------------------------
Net loan servicing fees (loss)                                      -                  -            (7,354)        (7,354)

Other non-interest income                                           -              2,928                 -          2,928
                                                 ------------------------------------------------------------------------
   Total non-interest income                                        -             91,139            (7,354)        83,785
                                                 ------------------------------------------------------------------------


Non-interest expenses:
   Salaries, commissions and benefits, net                          -             43,841               806         44,647
   Occupancy and equipment                                          -              5,492               131          5,623
   Data processing and communications                               -              3,052                27          3,079
   Office supplies and expenses                                     -              2,664               359          3,023
   Marketing and promotion                                          -              2,797                 2          2,799
   Travel and entertainment                                         -              1,986                 1          1,987
   Professional fees                                                -              1,709               132          1,841
   Other                                                            -              3,259               406          3,665
                                                 ------------------------------------------------------------------------
      Total non-interest expenses                                   -             64,800             1,864         66,664
                                                 ------------------------------------------------------------------------

Net income before income tax expense (benefit)                      -             37,894           (10,004)        27,890
                                                 ------------------------------------------------------------------------

Income tax expense (benefit)                                        -             15,584            (4,007)        11,577

                                                 ------------------------------------------------------------------------
Net income                                       $                  -   $         22,310    $       (5,997)   $    16,313
                                                 ========================================================================

                                                                                    December 31, 2003

                                                 ------------------------------------------------------------------------
Segment assets                                   $          1,865,414   $      1,372,976    $      164,000    $ 3,402,390
                                                 ========================================================================
</TABLE>

                                      -28-
<PAGE>

Mortgage-Backed Securities Holdings Segment
-------------------------------------------

Our Mortgage-Backed Securities Holdings segment began operations on December 3,
2003 as a result of the reorganization of the Company into a REIT and the merger
with Apex. The segment's business is the holding for net interest income of
adjustable-rate mortgage ("ARM")-backed securities.

The following table presents the average balances for the Mortgage-Backed
Securities Holdings segment's mortgage-backed securities and reverse repurchase
agreements, corresponding annualized effective rate of interest and the related
interest income or expense:

<TABLE>
<CAPTION>
                                             Three Months Ended March 31,
                                    -----------------------------------------------
(Dollars in thousands)                                  2004
                                    -----------------------------------------------
                                    Average Balance   Interest   Average Yield/Cost
                                    ---------------   --------   ------------------
<S>                                 <C>               <C>        <C>
Mortgage-backed securities, net     $     1,958,339   $ 15,149                 3.09%
                                    ---------------   --------   ------------------



Reverse repurchase agreements (1)         1,795,332      9,412                 2.10%
                                    ---------------   --------   ------------------


Net interest income                                   $  5,737
                                                      ========
Interest rate spread                                                           0.99%
                                                                 ==================
Net interest margin                                                            1.17%
                                                                 ==================
</TABLE>

(1) Includes net interest expense on interest rate swaps

Revenues. Total revenues for the Mortgage-Backed Securities Holdings segment
were $18.4 million, consisting entirely of $12.7 million of gain on
mortgage-backed securities and $5.7 million of net interest income.

Loan Origination Segment
------------------------

The Loan Origination segment's primary business is the origination and sale of
primarily one-to-four family residential mortgage loans. Total loan originations
for the quarter ended March 31, 2004 were $4.4 billion compared to $4.3 billion
for the first quarter of 2003, a 2.3% increase. At March 31, 2004, the segment
had 279 loan origination offices and 2,757 employees compared with 272 loan
origination offices and 2,791 employees at December 31, 2003.

Gain on Sales of Mortgage Loans and Mortgage-Backed Securities. The Loan
Origination segment's primary source of revenue is the gain on sales of mortgage
loans originated by the segment. Gain on sales of mortgage loans for the first
quarter of 2004 totaled $52.7 million compared with $88.2 million for the first
quarter of 2003.

Net Interest Income. Total interest income for the quarter ended March 31, 2004
on our Loan Origination segment's mortgages held for sale was $18.9 million,
compared to interest income for the quarter ended March 31, 2003 of $21.0
million, a decrease of $2.1 million, or 9.9%. The decrease was primarily due to
lower average yield in 2004. Our Loan Origination segment funds its loan
inventory primarily through borrowing facilities with several mortgage warehouse
lenders. Total interest expense for the quarter ended March 31, 2004 was $11.0
million, compared to interest expense for the quarter ended March 31, 2003 of
$9.4 million, a 16.4% increase, which was primarily due to increased borrowings
to fund our large loan inventory.

Other Revenue. Other revenue totaled $1.0 million for the quarter ended March
31, 2004 compared to $2.9 million for the quarter ended March 31, 2003. For the
quarter ended March 31, 2004, other income primarily includes revenue from title
services of $0.2 million, rental income of $0.6 million and premiums earned
totaling approximately $0.1 million. For the quarter ended March 31, 2003, other
income primarily consists of Principal Fulfillment Fees of $1.9 million, revenue
from title services of $0.5 million and volume incentive bonuses received from
loan purchasers totaling approximately $0.4 million. The fulfillment fees
represent non-recurring fees received from Principal Residential Mortgage, Inc.
("PRM") for loans closed by us on behalf of PRM. As part of the agreement to
acquire the retail


                                      -29-
<PAGE>

branches of PRM (the "Principal Branches"), we agreed to assume the costs
incurred to close out PRM's application pipeline as of the date of the agreement
on behalf of PRM for a per loan fee.

Expenses. Total expenses of our Loan Origination segment for the quarter ended
March 31, 2004 were $62.6 million, compared to $64.6 million for the quarter
ended March 31, 2003.

Our operating expenses represent costs that are not eligible to be added to the
book value of the loans because they are not considered direct origination costs
under the rules of SFAS No. 91 "Accounting for Nonrefundable Fees and Costs
Associated with Originating or Acquiring Loans and Initial Costs of Leases."
Direct origination costs are added to the book value of loans and either reduce
the gain on sale of loans if the loans are sold or are amortized over the life
of the loan.

Salaries, commissions and benefits for the quarter ended March 31, 2004 were
$38.6 million, or 87 basis points of total loan originations, compared to $43.8
million, or 102 basis points of total loan originations, for the quarter ended
March 31, 2003.

Operating expenses, excluding salaries, commissions and benefits, were 54 basis
points of total loan originations for the quarter ended March 31, 2004 and 48
basis points for the quarter ended March 31, 2003.

Income Tax Expense. Income tax expense decreased to $1.7 million for the quarter
ended March 31, 2004 from $15.6 million for the quarter ended March 31, 2003, a
decrease of $13.9 million, or 89.1%. The effective tax rate for the Loan
Origination segment is 12.6%, which includes permanent book-to-tax differences
related to activity within the REIT and the transactions between the taxable
REIT subsidiary ("TRS") and qualified REIT subsidiary ("QRS").


Loan Servicing Segment
----------------------

The Loan Servicing segment total revenues for the quarter ended March 31, 2004
were a loss of $10.5 million compared to a loss of $8.1 million for the quarter
ended March 31, 2003, a decrease of $2.4 million, or 29.6%.

Net loan servicing fees were a loss of $9.6 million for the quarter ended March
31, 2004, compared to a loss of $7.4 million for the quarter ended March 31,
2003.

Loan servicing fees decreased to $10.3 million for the quarter ended March 31,
2004 from $11.1 million for the quarter ended March 31, 2003, a decrease of $0.8
million, or 7.2%. Included in loan servicing fees are gains on Ginnie Mae early
buy-out sales of $2.4 million for the quarter ended March 31, 2004 compared to
$3.6 million for the quarter ended March 31, 2003, a decrease of $1.2 million,
or 33.3%.

Amortization decreased to $7.3 million for the quarter ended March 31, 2004 from
$12.8 million for the quarter ended March 31, 2003, a decrease of $5.5 million,
or 43.0%.

We recognized a temporary impairment provision of $12.6 million for the quarter
ended March 31, 2004 versus a temporary impairment provision of $5.7 million for
the quarter ended March 31, 2003, resulting in a decrease in net loan servicing
fees of $6.9 million. The increase in impairment provision in the quarter ended
March 31, 2004 is due to a decrease in the fair value of servicing rights
attributable to an increase in estimated future prepayment speeds. The increase
in estimated future prepayment speeds was a result of a reduction of interest
rates in the quarter ended March 31, 2004. Given the current level of interest
rates, the Company expects amortization to slow and expects to recover its
impairment reserve, net of taxes, in the quarter ended June 30, 2004.

Expenses. Total expenses of our Loan Servicing segment for the quarter ended
March 31, 2004 were $3.0 million, compared to $1.9 million for the quarter ended
March 31, 2003.

Income Tax Benefit. Income tax benefit increased to $5.5 million for the quarter
ended March 31, 2004 from a $4.0 million benefit for the quarter ended March 31,
2003, an increase of $1.5 million, or 37.5%.

Liquidity and Capital Resources

 We have arrangements to enter into reverse repurchase agreements, a form of
collateralized short-term borrowing, with 13 different financial institutions
and on March 31, 2004 had borrowed funds from five of these firms. Because we
borrow money under these agreements based on the fair value of our
mortgage-backed securities, and because changes in interest rates can negatively
impact the valuation of mortgage-backed securities, our borrowing ability under
these agreements could be limited and lenders could initiate margin calls in the
event interest rates change or the value of our mortgage-backed securities
declines for other reasons.

                                      -30-
<PAGE>

As of March 31, 2004, we had $3.4 billion of reverse repurchase agreements
outstanding with a weighted-average borrowing rate of 1.24% before the impact of
interest rate swaps and a weighted-average remaining maturity of 4.4 months.

To originate a mortgage loan, we draw against a $1.2 billion pre-purchase
facility with UBS Real Estate Securities Inc. (formerly Paine Webber Real Estate
Securities Inc.) ("UBS"), a $450 million bank syndicated facility led by
Residential Funding Corporation ("RFC"), a $450 million facility with CDC IXIS
Capital Markets North America Inc. ("CDC"), a facility of $350 million with
Morgan Stanley Bank ("Morgan Stanley") and a facility of $200 million with
Credit Lyonnais. In addition, the Company has a gestation facility with
Greenwich Capital Financial Products, Inc. These facilities are secured by the
mortgages owned by us and by certain of our other assets. Advances drawn under
the facilities bear interest at rates that vary depending on the type of
mortgages securing the advances. These loans are subject to sublimits, advance
rates and terms that vary depending on the type of securing mortgages and the
ratio of the Company's liabilities to its tangible net worth. At May 4, 2004,
the aggregate outstanding balance under the warehouse facilities was $1.9
billion, the aggregate outstanding balance in drafts payable was $49.7 million
and the aggregate maximum amount available for additional borrowings was $604.8
million.

The documents governing our warehouse facilities contain a number of
compensating balance requirements and restrictive financial and other covenants
that, among other things, require us to adhere to a maximum ratio of total
liabilities to tangible net worth and maintain a minimum level of tangible net
worth and liquidity, as well as to comply with applicable regulatory and
investor requirements. The facility agreements also contain covenants limiting
the ability of our subsidiaries to transfer or sell assets other than in the
ordinary course of business and to create liens on the collateral without
obtaining the prior consent of the lenders, which consent may not be
unreasonably withheld.

In addition, under our warehouse facilities, we cannot continue to finance a
mortgage loan that we hold if:

   o  the loan is rejected as "unsatisfactory for purchase" by the ultimate
      investor and has exceeded its permissible 120-day warehouse period;

   o  we fail to deliver the applicable mortgage note or other documents
      evidencing the loan within the requisite time period;

   o  the underlying property that secures the loan has sustained a casualty
      loss in excess of 5% of its appraised value; or

   o  the loan ceases to be an eligible loan (as determined pursuant to the
      applicable warehousing agreement).

As of March 31, 2004, our aggregate warehouse facility borrowings were $1.3
billion (including $26 million of borrowings under a working capital sub-limit)
and our outstanding drafts payable were $64.3 million, compared to $1.1 billion
(including $29 million of borrowings under a working capital sub-limit) and our
outstanding drafts payable were $25.6 million as of December 31, 2003. At March
31, 2004, our loans held for sale were $1.4 billion compared to $1.2 billion at
December 31, 2003.

In addition to the UBS, CDC, RFC, Morgan Stanley, and Credit Lyonnais warehouse
facilities, we have a purchase and sale agreement with UBS. This agreement
allows us to accelerate the sale of our mortgage loan inventory, resulting in a
more effective use of the warehouse facility. Amounts sold and being held under
this agreement at March 31, 2004 and December 31, 2003 were $234 million and
$236 million, respectively. The amount so held under this agreement at May 3,
2004 was $263 million. This agreement is not a committed facility and may be
terminated at the discretion of the counterparty.

We make certain representations and warranties under the purchase and sale
agreements regarding, among other things, the loans' compliance with laws and
regulations, their conformity with the ultimate investors' underwriting
standards and the accuracy of information. In the event of a breach of these
representations or warranties or in the event of an early payment default, we
may be required to repurchase the loans and indemnify the investor for damages
caused by that breach. We have implemented strict procedures to ensure quality
control and conformity to underwriting standards and minimize the risk of being
required to repurchase loans. From time to time we have been required to
repurchase loans that we sold; however, the liability for the fair value of
those obligations has been immaterial.

We also have a $100 million term loan facility with a bank syndicate led by RFC
which we use to finance our MSRs. The term loan facility expires on May 28,
2004. Interest is based on a spread to the LIBOR and may be adjusted for
earnings on escrow balances. At March 31, 2004 and December 31, 2003, borrowings
under our term loan facility were $76.5 million and $71.5 million, respectively.

Cash and cash equivalents increased to $97.6 million at March 31, 2004 from
$53.1 million at December 31, 2003.

Our primary sources of cash and cash equivalents during the quarter ended March
31, 2004, were as follows:

                                      -31-
<PAGE>

   o  $ 2.1 billion increase in reverse repurchase agreements;

   o  $ 341.9 million proceeds from issuance of capital stock; and

   o  $ 130.1 million increase in warehouse lines of credit.

Our primary uses of cash and cash equivalents during the quarter ended March 31,
2004, were as follows:

   o  $ 2.2 billion net increase in mortgage-backed securities; and

   o  $ 147.2 million net increase in mortgage loans held for sale.



Commitments

The Company had the following commitments (excluding derivative financial
instruments) at March 31, 2004:

<TABLE>
<CAPTION>
                                                Less Than                                   After
                                     Total        1 Year     1 - 3 Years    4 - 5 Years    5 Years
                                   ----------   ----------   ------------   ------------   --------
                                                            (in thousands)
<S>                                <C>          <C>          <C>            <C>            <C>
Warehouse facilities               $1,251,845   $1,251,845   $          -   $          -   $      -
Operating leases                       48,218       11,396         28,897          7,286        639
Notes payable                         106,423       80,320            697            780     24,626
Reverse repurchase agreements       3,394,941    3,394,941              -              -          -
Payable for securities purchased      134,647      134,647              -              -          -
</TABLE>

                                      -32-
<PAGE>

                                     ITEM 3.

           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Movements in interest rates can pose a major risk to the Company in either a
rising or declining interest rate environment. The Company depends on
substantial borrowings to conduct its business. These borrowings are all done at
variable interest rate terms which will increase as short term interest rates
rise. Additionally, when interest rates rise, loans held for sale and any
applications in process with locked-in rates decrease in value. To preserve the
value of such fixed-rate loans or applications in process with locked-in rates,
agreements are executed for mandatory loan sales to be settled at future dates
with fixed prices. These sales take the form of forward sales of mortgage-backed
securities.

When interest rates decline, fallout may occur as a result of customers
withdrawing their applications. In those instances, the Company may be required
to purchase loans at current market prices to fulfill existing mandatory loan
sale agreements, thereby incurring losses upon sale. The Company uses an
interest rate hedging program to manage these risks. Through this program,
mortgage-backed securities are purchased and sold forward and options are
acquired on treasury futures contracts.

In the event that the Company does not deliver into the forward delivery
commitments or exercise its option contracts, the instruments can be settled on
a net basis. Net settlement entails paying or receiving cash based upon the
change in market value of the existing instrument. All forward delivery
commitments and option contracts to buy securities are to be contractually
settled within six months of the balance sheet date.

The Company's hedging program contains an element of risk because the
counterparties to its mortgage and treasury securities transactions may be
unable to meet their obligations. While the Company does not anticipate
nonperformance by any counterparty, it is exposed to potential credit losses in
the event the counterparty fails to perform. The Company's exposure to credit
risk in the event of default by a counterparty is the difference between the
contract and the current market price. The Company minimizes its credit risk
exposure by limiting the counterparties to well-capitalized banks and securities
dealers who meet established credit and capital guidelines.
Movements in interest rates also impact the value of MSRs. When interest rates
decline, the loans underlying the MSRs are generally expected to prepay faster,
which reduces the market value of the MSRs. The Company considers the expected
increase in loan origination volumes and the resulting additional origination
related income as a natural hedge against the expected change in the value of
MSRs. Lower mortgage rates generally reduce the fair value of the MSRs, as
increased prepayment speeds are highly correlated with lower levels of mortgage
interest rates.

The Company enters into interest rate swap agreements ("Swap Agreements") to
manage its interest rate exposure when financing its adjustable-rate loans and
its mortgage-backed securities. The Company generally borrows money based on
short-term interest rates, by entering into borrowings with maturity terms of
less than one year, and frequently six to 12 months. The Company's
adjustable-rate loans and mortgage-backed securities financing vehicles
generally have an interest rate that reprices based on frequency terms of one to
12 months. The Company's mortgage-backed securities have an initial fixed
interest rate period of three to five years. When the Company enters into a Swap
Agreement, it generally agrees to pay a fixed rate of interest and to receive a
variable interest rate, generally based on LIBOR. These Swap Agreements have the
effect of converting the Company's variable-rate debt into fixed-rate debt over
the life of the Swap Agreements. These instruments are used as a cost-effective
way to lengthen the average repricing period of the Company's variable-rate and
short-term borrowings such that the average repricing of the borrowings more
closely matches the average repricing of the Company's mortgage-backed
securities. The Company's duration gap was less than one month on March 31,
2004.


                                      -33-
<PAGE>

The following table summarizes the Company's interest rate sensitive
instruments:

<TABLE>
<CAPTION>
                                                                    March 31, 2004
                                                         ------------------------------------
                                                          Notional     Carrying    Estimated
                                                           Amount       Amount     Fair Value
                                                         ----------   ----------   ----------
                                                                   (In thousands)
<S>                                                      <C>          <C>          <C>
Assets:
Mortgage-backed securities                               $3,969,385   $4,003,079   $4,003,079
Interest rate lock commitments                            2,097,828       24,151       24,151
Mortgage loans held for sale, net                         1,330,349    1,371,048    1,375,686
Mortgage servicing rights, net                            8,956,144      113,519      113,519

Liabilities:
Forward delivery commitments- Loan commitments           $  430,019   $      699   $      699
Forward delivery commitments - Loans held for sale (1)      944,000          150          150
Interest rate swaps                                       1,270,000       20,596       20,596
</TABLE>

<TABLE>
<CAPTION>
                                                                  December 31, 2003
                                                         ------------------------------------
                                                          Notional     Carrying    Estimated
                                                           Amount       Amount     Fair Value
                                                         ----------   ----------   ----------
                                                                   (In thousands)
<S>                                                      <C>          <C>          <C>
Assets:
Mortgage-backed securities                               $1,759,064   $1,763,628   $1,763,628
Interest rate lock commitments                            1,140,350       20,837       20,837
Mortgage loans held for sale, net                         1,187,314    1,223,827    1,226,141
Mortgage servicing rights, net                            8,272,294      117,784      117,784

Liabilities:
Forward delivery commitments- Loan commitments           $  477,863   $    4,358   $    4,358
Forward delivery commitments - Loans held for sale (1)    1,161,217        2,300        2,300
Interest rate swaps                                         755,000        6,036        6,036
</TABLE>

(1) This amount is included in mortgage loans held for sale, net (see Note 3).

The Company had total commitments to lend at March 31, 2004 and December 31,
2003 of $7.3 billion and $4.0 billion, respectively.



                                     ITEM 4.

                            CONTROLS AND PROCEDURES

Disclosure Controls and Procedures
----------------------------------

The Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of the Company's
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
of the end of the period covered by this quarterly report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer had
previously concluded that the Company's disclosure controls and procedures were
effective as of the end of the period covered by this quarterly report. However,
subsequent to the filing of the Company's Annual Report on Form 10-K for the
year ended December 31, 2004, the Company identified a material weakness in the
Company's internal control over financial reporting, which is a significant
portion of our disclosure controls and procedures, which affected the Company's
cash flow statement for the period covered by this quarterly report. As a result
of this material weakness, the Chief Executive



                                      -34-
<PAGE>

Officer and Chief Financial Officer have now concluded that the Company's
disclosure controls and procedures were not effective as of the end of the
period covered by this quarterly report.

Material Weakness in Internal Control Over Financial Reporting
--------------------------------------------------------------

A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in more than a remote likelihood that a material
misstatement of the annual or interim financial statements will not be prevented
or detected. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the Company's ability to initiate,
authorize, record, process, or report external financial information reliably in
accordance with generally accepted accounting principles such that there is more
than a remote likelihood that a misstatement of the Company's annual or interim
financial statements that is more than inconsequential will not be prevented or
detected.

Subsequent to the filing of the Company's Annual Report on Form 10-K for the
year ended December 31, 2004, the Company identified a material weakness, in
internal control over financial reporting, that existed as of March 31, 2004.
Specifically, the Company's control intended to ensure the proper classification
of cash flows related to the securitization of certain mortgage loans held for
sale and the subsequent holding of securities retained from securitizations did
not operate effectively as of March 31, 2004. The Company incorrectly concluded
that such cash flows should be classified as cash flows from investing
activities due to its intent to hold the resulting securities in its portfolio.
As a result, the Company improperly classified cash flows related to certain
securitization and mortgage-backed securities holding activities as cash flows
from investing activities rather than cash flows from operating activities. As a
result of this material weakness, the Company is filing this report on Form
10-Q/A to restate its quarterly cash flow statement for the quarter ended March
31, 2004.

Changes in Internal Control Over Financial Reporting
----------------------------------------------------

There were no changes that occurred during the first quarter of 2004 that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting.

                                      -35-

<PAGE>

                            PART II-OTHER INFORMATION

                                     ITEM 1.

                                LEGAL PROCEEDINGS

In the ordinary course of its business, the Company is at times subject to
various legal proceedings. The Company does not believe that any of its current
legal proceedings, individually or in the aggregate, will have a material
adverse effect on its operations or financial condition.

A multitude of class action lawsuits have been filed against companies in the
mortgage banking industry, which allege, among other things, violations of the
terms of the mortgage loan documents and certain laws, rules and regulations
(including, without limitation, consumer protection laws). These lawsuits may
result in similar suits being filed against the Company. In addition, the
publicity generated by such lawsuits may result in legislation that affects the
manner in which the Company conducts its business and its relationships with
mortgage brokers, correspondents and others. Any of these developments may
materially and adversely affect the Company's business, financial condition and
results of operations.


                                     ITEM 2.

           CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES
                              OF EQUITY SECURITIES

The following is a description of the Company's securities that were not
registered under the Securities Act of 1933, as amended (the "Securities Act"),
which were sold during the quarter ended March 31, 2004.

The Company acquired First Home Mortgage Corp. ("First Home") on June 30, 2000.
In addition to the shares paid to former First Home shareholders as initial
consideration, the Company is required to issue unregistered shares of common
stock to the former shareholders as additional consideration under the earnout
provisions of the merger agreement. On January 1, 2004, pursuant to these
earnout provisions, the Company issued an aggregate of 2,304 shares of common
stock to such shareholders as additional consideration. In addition, on February
15, 2004, the Company issued 2,454 shares of common stock to such shareholders.
These securities were exempt from registration under Section 4(2) of the
Securities Act because they were issued pursuant to the terms of a private
transaction rather than through a public offering.


                                     ITEM 3.

                         DEFAULTS UPON SENIOR SECURITIES

                                      None.


                                     ITEM 4.

               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                                      None.


                                     ITEM 5.

                                OTHER INFORMATION

                                      None.

                                      -36-
<PAGE>

                                     ITEM 6.

                        EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

The following exhibits are filed as part of this report on Form 10-Q/A:

Exhibit 10.1      Amendment to Amended and Restated Master Repurchase Agreement,
                  dated as of January 1, 2004, by and between American Home
                  Mortgage Corp. and CDC Mortgage Capital Inc.

Exhibit 10.2      Guarantee, dated as of January 1, 2004, made by the Company,
                  as Guarantor, on behalf of American Home Mortgage Corp. in
                  favor of CDC Mortgage Capital Inc.

Exhibit 10.3      Amended and Restated Mortgage Loan Purchase Agreement, dated
                  as of February 6, 2004, by and among UBS Real Estate
                  Securities Inc., the Company, American Home Mortgage
                  Acceptance, Inc., American Home Mortgage Holdings, Inc.,
                  American Home Mortgage Corp. and Columbia National,
                  Incorporated.

Exhibit 10.4      Amended and Restated Mortgage Loan Repurchase Agreement, dated
                  as of February 6, 2004, by and among UBS Real Estate
                  Securities Inc., the Company, American Home Mortgage
                  Acceptance, Inc., American Home Mortgage Holdings, Inc.,
                  American Home Mortgage Corp. and Columbia National,
                  Incorporated.

Exhibit 10.5      Amended and Restated Mortgage Loan Custodial Agreement, dated
                  as of February 6, 2004, by and among UBS Real Estate
                  Securities Inc., Deutsche Bank National Trust Company, the
                  Company, American Home Mortgage Acceptance, Inc., American
                  Home Mortgage Holdings, Inc., American Home Mortgage Corp. and
                  Columbia National, Incorporated.

Exhibit 10.6      Amended and Restated Mortgage Loan Participation Agreement,
                  dated as of February 6, 2004, by and among UBS Real Estate
                  Securities Inc., the Company, American Home Mortgage
                  Acceptance, Inc., American Home Mortgage Holdings, Inc.,
                  American Home Mortgage Corp. and Columbia National,
                  Incorporated.

Exhibit 10.7      Amended and Restated Custodial Agreement, dated as of February
                  6, 2004, by and among UBS Real Estate Securities Inc.,
                  Deutsche Bank National Trust Company, the Company, American
                  Home Mortgage Acceptance, Inc., American Home Mortgage
                  Holdings, Inc., American Home Mortgage Corp. and Columbia
                  National, Incorporated.

Exhibit 10.8      Amended and Restated Employment Agreement, dated as of April
                  27, 2004, by and between American Home Mortgage Holdings, Inc.
                  and John A. Johnston.

Exhibit 31.1      Certification of Chief Executive Officer pursuant to Rule
                  13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934,
                  as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                  of 2002.

Exhibit 31.2      Certification of Chief Financial Officer pursuant to Rule
                  13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934,
                  as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
                  of 2002.

Exhibit 32.1      Certification of Chief Executive Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

Exhibit 32.2      Certification of Chief Financial Officer pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.


(b) Reports on Form 8-K.

During the fiscal quarter ended March 31, 2004, the Company filed with the SEC
the following Current Reports on Form 8-K:

   o  Current Report on Form 8-K, dated February 12, 2004, and filed on February
      12, 2004, which reported the commencement of a proposed offering of 10
      million shares of the Company's common stock pursuant to a universal shelf
      registration statement on Form S-3, and announced the declaration of two
      special dividends in lieu of one regular dividend at the end of the first
      quarter of 2004.

                                      -37-
<PAGE>

   o  Current Report on Form 8-K, dated January 29, 2004, and furnished to the
      SEC on January 29, 2004, which disclosed that the Company had issued a
      press release announcing its financial results for the fiscal quarter and
      year ended December 31, 2003.

   o  Current Report on Form 8-K, dated January 12, 2004, and filed with the SEC
      on January 12, 2004, which reported that the Company would report its
      financial results for the fiscal quarter and year ended December 31, 2003
      on January 29, 2004, and announced that the Company's universal shelf
      registration statement on Form S-3 was declared effective by the SEC on
      January 12, 2004.

                                      -38-
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                    AMERICAN HOME MORTGAGE INVESTMENT CORP.
                                    (Registrant)



Date:    April 29, 2005             By:   /s/ Michael Strauss
                                       -----------------------------------------
                                       Michael Strauss
                                       Chairman of the Board, Chief Executive
                                       Officer and President


Date:    April 29, 2005             By:   /s/ Stephen A. Hozie
                                       -----------------------------------------
                                       Stephen A. Hozie
                                       Executive Vice President and Chief
                                       Financial Officer
                                       (Principal Financial Officer)

                                      -39-

<PAGE>

                                INDEX TO EXHIBITS


Exhibit No.                                Description
-----------          --------------------------------------------------------
10.1         --      Amendment to Amended and Restated  Master  Repurchase
                     Agreement, dated as of January 1, 2004, by and between
                     American Home Mortgage Corp. and CDC Mortgage Capital Inc.

10.2         --      Guarantee, dated as of January 1, 2004, made by the
                     Company, as Guarantor, on behalf of American Home Mortgage
                     Corp. in favor of CDC Mortgage Capital Inc.

10.3         --      Amended and Restated Mortgage Loan Purchase Agreement,
                     dated as of February 6, 2004, by and among UBS Real Estate
                     Securities Inc., the Company, American Home Mortgage
                     Acceptance, Inc., American Home Mortgage Holdings, Inc.,
                     American Home Mortgage Corp. and Columbia National,
                     Incorporated.

10.4         --      Amended and Restated Mortgage Loan Repurchase Agreement,
                     dated as of February 6, 2004, by and among UBS Real Estate
                     Securities Inc., the Company, American Home Mortgage
                     Acceptance, Inc., American Home Mortgage Holdings, Inc.,
                     American Home Mortgage Corp. and Columbia National,
                     Incorporated.

10.5         --      Amended and Restated Mortgage Loan Custodial Agreement,
                     dated as of February 6, 2004, by and among UBS Real Estate
                     Securities Inc., Deutsche Bank National Trust Company, the
                     Company, American Home Mortgage Acceptance, Inc., American
                     Home Mortgage Holdings, Inc., American Home Mortgage Corp.
                     and Columbia National, Incorporated.

10.6         --      Amended and Restated Mortgage Loan Participation Agreement,
                     dated as of February 6, 2004, by and among UBS Real Estate
                     Securities Inc., the Company, American Home Mortgage
                     Acceptance, Inc., American Home Mortgage Holdings, Inc.,
                     American Home Mortgage Corp. and Columbia National,
                     Incorporated.

10.7         --      Amended and Restated Custodial Agreement, dated as of
                     February 6, 2004, by and among UBS Real Estate Securities
                     Inc., Deutsche Bank National Trust Company, the Company,
                     American Home Mortgage Acceptance, Inc., American Home
                     Mortgage Holdings, Inc., American Home Mortgage Corp. and
                     Columbia National, Incorporated.

10.8         --      Amended and Restated Employment Agreement, dated as of
                     April 27, 2004, by and between American Home Mortgage
                     Holdings, Inc. and John A. Johnston.

31.1         --      Certification of Chief Executive Officer pursuant to
                     Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act
                     of 1934, as adopted pursuant to Section 302 of the
                     Sarbanes-Oxley Act of 2002.

31.2         --      Certification of Chief Financial Officer pursuant to
                     Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act
                     of 1934, as adopted pursuant to Section 302 of the
                     Sarbanes-Oxley Act of 2002.

32.1         --      Certification of Chief Executive Officer pursuant to 18
                     U.S.C. Section 1350, as adopted pursuant to Section 906 of
                     the Sarbanes-Oxley Act of 2002.

32.2         --      Certification of Chief Financial Officer pursuant to 18
                     U.S.C. Section 1350, as adopted pursuant to Section 906 of
                     the Sarbanes-Oxley Act of 2002.