Franklin Credit Management to Delay Filing of Third Quarter 2007 Operating Results to Permit Assessment of Magnitude of Increased Reserves

Company to Suspend Acquisition and Origination Activity for Duration of

Assessment

    NEW YORK, Nov. 15 /PRNewswire-FirstCall/ -- Franklin Credit Management
 Corporation ( FCMC), a specialty consumer finance company primarily
 engaged in the acquisition, origination, servicing and resolution of
 performing, reperforming and nonperforming residential mortgage loans,
 today announced a delay in the reporting of its operating results for the
 third quarter and nine months of 2007. Franklin also announced the
 suspension of funding for new loan acquisition and origination activities
 by its lead lender bank (the "bank"), for the period of such delay. The
 bank is under no obligation to resume funding the Company's loan
 originations and acquisitions after operating results are reported. As a
 result, the Company announced that it has suspended the acquisition and
 origination of new loans.
     Due to the rapidly deteriorating real estate and mortgage origination
 credit market and resulting industry-wide increase in delinquencies
 involving mortgages originated in the years 2005 and 2006, particularly for
 second-lien loans, Franklin is in the process of reviewing and assessing
 the reserves for its portfolio of acquired loans, particularly second-lien
 mortgage loans acquired in those years. The Company currently anticipates
 that it will complete its review, release its quarterly results and file
 its Form 10-Q for the third quarter prior to December 31, 2007.
     The Company expects that this credit review will result in a
 substantial increase in the provision for loan losses for the quarter ended
 September 30, 2007 due to increased delinquencies and the expectation of
 increased defaults and ultimate losses inherent in the portfolio as of
 September 30, 2007, particularly for its portfolio of second-lien loans.
 The Company expects that this increase will result in substantial negative
 stockholder's equity as of September 30, 2007.
     The Company has recently advised its bank of these developments and has
 been working with its bank in connection with the anticipated increase in
 the provision for loan losses, and the implications for the Company's
 equity position. The bank has agreed to waive any resulting breaches of its
 debt covenants for the Company's failure to timely file its financial
 statements for the quarter ended September 30, 2007, until the earlier of
 the filing of the third quarter financial statements or December 31, 2007.
 In consideration of these waivers, the Company has pledged all previously
 unencumbered assets of the Company and its subsidiaries as additional
 security to the bank.
     The bank is under no obligation to grant additional waivers of any
 future covenant violations. If an accommodation with the bank is not
 reached and covenant violations were to occur and not be waived, such
 violations could result in defaults under the Company's or its
 subsidiaries' credit agreements with the bank or other lending
 institutions, and the Company's debt could become immediately due and
 payable, resulting in the Company's insolvency.
     Tom Axon, Chairman and President of the Company, commented, "While we
 can give no assurances, we are in active discussions with our bank about
 potential options that could be beneficial for both parties."
     About Franklin Credit Management Corporation
     Franklin Credit Management Corporation ("Franklin") is a specialty
 consumer finance company primarily engaged in two related lines of business
 -- the acquisition, servicing and resolution of performing, reperforming
 and nonperforming residential mortgage loans; and the origination of
 non-prime mortgage loans for the Company's portfolio and for sale into the
 secondary market. Franklin focuses on acquiring and originating loans
 secured by 1-4 family residential real estate that generally fall outside
 the underwriting standards of Fannie Mae and Freddie Mac and involve
 elevated credit risk as a result of the nature or absence of income
 documentation, limited credit histories, higher levels of consumer debt or
 past credit difficulties. The Company typically purchases loan portfolios
 at a discount to the unpaid principal balance and originates loans with
 interest rates and fees calculated to provide a rate of return adjusted to
 reflect the elevated credit risk inherent in these types of loans. Franklin
 originates non-prime loans through its wholly-owned subsidiary, Tribeca
 Lending Corp. and generally holds for investment the loans acquired and a
 significant portion of the loans originated. The Company's executive
 offices are headquartered in New York City and its new administrative and
 operations office is located in Jersey City, New Jersey. Additional
 information on the Company is available on the Internet at
 http://www.franklincredit.com. Franklin's common stock is listed on the
 NASDAQ Global Market under the symbol "FCMC".
     Statements contained herein that are not historical fact may be
 forward-looking statements within the meaning of Section 27A of the
 Securities Act of 1933, as amended, and Section 21E of the Securities
 Exchange Act of 1934, as amended, that are subject to a variety of risks
 and uncertainties. There are a number of important factors that could cause
 actual results to differ materially from those projected or suggested in
 forward-looking statements made by the Company. These factors include, but
 are not limited to: (i) unanticipated changes in the U.S. economy,
 including changes in business conditions such as interest rates, and
 changes in the level of growth in the finance and housing markets; (ii) the
 status of the Company's relations with the Company's principal lender and
 such lender's willingness to extend credit to the Company; (iii) the
 availability for purchases of additional loans; (iv) the availability of
 sub-prime borrowers for the origination of additional loans; (v) changes in
 the statutes or regulations applicable to the Company's business or in the
 interpretation and enforcement thereof by the relevant authorities; (vi)
 the status of the Company's regulatory compliance; and (vii) other risks
 detailed from time to time in the Company's SEC reports and filings.
 Additional factors that would cause actual results to differ materially
 from those projected or suggested in any forward-looking statements are
 contained in the Company's filings with the Securities and Exchange
 Commission, including, but not limited to, those factors discussed under
 the captions "Risk Factors", "Interest Rate Risk" and "Real Estate Risk" in
 the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q
 which the Company urges investors to consider. The Company undertakes no
 obligation to publicly release the revisions to such forward-looking
 statements that may be made to reflect events or circumstances after the
 date hereof or to reflect the occurrences of unanticipated events, except
 as other wise required by securities, and other applicable laws. Readers
 are cautioned not to place undue reliance on these forward-looking
 statements, which speak only as of the date hereof. The Company undertakes
 no obligation to release publicly the results on any events or
 circumstances after the date hereof or to reflect the occurrence of
 unanticipated events.
     Contact: Paul Colasono, CFO Franklin Credit Management Corporation
     (201) 604-4402
     pcolasono@franklincredit.com
 
 

SOURCE Franklin Credit Management Corporation