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AMERICA FIRST MORTGAGE SERVICING CO. L.P. I ANNOUNCES NOTE REDEMPTION

    OMAHA, Neb., Aug. 5 /PRNewswire/ -- America First Mortgage Servicing Co. L.P. I (AMEX: AFM.S) announced today that it will redeem all of its outstanding notes on Sept. 4, 1993.  The 12 percent collateralized notes were due to mature on July 1, 1998.  The notes will be redeemed at a price equal to the principal amount ($1,000 per note) plus accrued interest through the redemption date.  The company will continue to hold its servicing portfolio of 7,659 mortgages with an unpaid principal balance of $408,545,847 at June 30, 1993.  The equity interests, which originally made up one quarter of each unit, will remain in place.
    Since the third quarter of 1992, mortgage prepayments and defaults have had a negative effect on the company's cash flow.  Long-term mortgage interest rates, which averaged approximately 9.5 percent when the company issued the notes, have fallen to their lowest level in more than two decades.  Nationally, long-term rates are currently averaging between 7.00 percent and 7.5 percent.  As a result, prepayments on the company's portfolio have been significantly higher than anticipated.
    Conversely, as interest rates have decreased the value of the zero coupon bonds, which were purchased both to collateralize the notes and to mitigate the effects of decreases in interest rates, has increased.  At July 30, 1993, the market value of the zeros was more than 16 percent over their book value.  The general partner has made the decision to capture the profit in the zeros on behalf of the limited partners by selling the zeros and using the proceeds and additional third party borrowings to redeem 100 percent of the outstanding notes. By taking this action the company will reduce its interest obligations from $1,260,000 on $11,000,000 debt to $330,000 on $3.3 million debt. The substantial savings in interest expenses will enhance the company's ability to weather an extended period of higher-than-anticipated prepayments.
    -0-             08/05/93
    CONTACT:  Maurice Cox Jr. of America First, 402-444-1630
    (AFM.S) CO:  AMERICA FIRST MORTGAGE SERVICING CO. L.P. I IN:  FIN ST:  NE


-- DV010 -- X375 08/05/93
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Publication:PR Newswire
Date:Aug 5, 1993
Words:357
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