American Home Mortgage Servicing Inc., the company assembled by the billionaire Wilbur Ross, has bookkeeping problems that may hurt bond investors, Moody's Investors Service said, potentially including ones who borrowed from the Federal Reserve.

The Coppell, Texas, servicer has been slow to reconcile numerous items in custodial bank statements with its accounting records, citing "inconsistencies" between two technology systems, the rating firm said March 19. "Although reconciliation items are not uncommon in the mortgage servicing industry, servicers will typically resolve such items within 30 days of being identified," which hasn't been the case with American Home, Moody's analysts Navneet Agarwal and Zhiqin Huang wrote. They wrote that "there is a significant amount of aged" — 60 days or more — "reconciliation items" at American Home.

As a result, Moody's said it may downgrade as much as $225 million of securities backed by American Home's advances of delinquent homeowners' payments to mortgage-bond investors, even though the company has fattened the transaction's reserve fund by $20 million to protect bondholders as it fixes its procedures.

Any default may cost the Fed, which lent $107.5 million to buyers of the servicer-advance bonds through its Term Asset-Backed Securities Loan Facility.

American Home said on March 19 that "we haven't incurred any losses to date directly related to the reconciliation effort nor do we expect to incur any losses. … Our agreement to increase the reserve fund by $20 million and to maintain a material additional deposit in the fund until the situation is resolved demonstrates our strong commitment to maintain the AAA rating."

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