8-K

 

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

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): April 30, 2007

FIELDSTONE INVESTMENT CORPORATION
__________________________________________
(Exact name of registrant as specified in its charter)

Maryland	000-50938	74-2874689
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
11000 Broken Land Parkway, Columbia, Maryland		21044
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: (410) 772-7200

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On April 30, 2007, Fieldstone Investment Corporation ("Fieldstone") and Fieldstone Mortgage Company, a direct wholly owned subsidiary of Fieldstone ("Fieldstone Mortgage" and collectively with Fieldstone, the "Sellers") entered into the Eighth Amendment (the "Eighth Amendment") to the Second Amended and Restated Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans, dated as of December 29, 2004, as amended (the "Lehman Master Repurchase Agreement"), with Lehman Brothers Bank, FSB ("Lehman"). The Eighth Amendment extends the amendment period that the Sellers received from Lehman with respect to certain covenants, including the adjusted tangible net worth covenant, the minimum liquidity covenant, and the maximum permitted combined ratio of consolidated indebtedness to adjusted tangible net worth from April 30, 2007 to May 31, 2007. The Eighth Amendment also reduces its maximum aggregate purchase price under the Lehman Master Repurchase Agreement from $400 million to $200 million and ch anges the repurchase facility from a committed facility to an uncommitted facility. There were no borrowings under the facility as of April 30, 2007.

The foregoing description of the Eighth Amendment is qualified in its entirety by the Eighth Amendment, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1 Eighth Amendment, dated as of April 30, 2007, to the Second Amended and Restated Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans, dated as of December 29, 2004, as amended, by and among Lehman Brothers Bank, FSB, Fieldstone Investment Corporation and Fieldstone Mortgage Company.

SIGNATURES

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

	FIELDSTONE INVESTMENT CORPORATION
May 4, 2007	By:	/s/ Nayan V. Kisnadwala
		Name: Nayan V. Kisnadwala
		Title: Executive Vice President and Chief Financial Officer

Exhibit Index

Exhibit No.	Description
10.1	Eighth Amendment, dated as of April 30, 2007, to the Second Amended and Restated Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans, dated as of December 29, 2004, as amended, by and among Lehman Brothers Bank, FSB, Fieldstone Investment Corporation and Fieldstone Mortgage Company.

EX-10.1

Exhibit 10.1

EXECUTION VERSION

EIGHTH AMENDMENT TO
SECOND AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT
GOVERNING PURCHASES AND SALES OF MORTGAGE LOANS

This Eighth Amendment, dated as of April 30, 2007 (this “Amendment”), to the Second Amended and Restated Master Repurchase Agreement Governing Purchases and Sales of Mortgage Loans, dated as of December 29, 2004 and amended as of December 28, 2005, October 31, 2006, December 19, 2006, December 27, 2006, January 26, 2007, March 30, 2007 and April 13, 2007 (as amended, the “Repurchase Agreement”), is made by and among LEHMAN BROTHERS BANK, FSB (“Buyer”), FIELDSTONE INVESTMENT CORPORATION (“FIC”) and FIELDSTONE MORTGAGE COMPANY (“FMC”) (FIC and FMC shall be individually and collectively referred to as “Seller”). Buyer, FMC and FIC may be collectively referred to herein as the “Parties”.

RECITALS

WHEREAS, pursuant to the Repurchase Agreement, Buyer has agreed, subject to the terms and conditions set forth in the Repurchase Agreement, to purchase certain Mortgage Loans owned by Seller, including, without limitation, all rights of Seller to service and administer such Mortgage Loans; and

WHEREAS, the Parties desire to amend the Repurchase Agreement as set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

Section 1. Definitions. Capitalized terms used but not otherwise defined herein have the meanings given them in the Repurchase Agreement.

Section 2. Uncommitted Transactions. Notwithstanding anything in the Repurchase Agreement to the contrary, each Transaction to be entered into after April 30, 2007 (including, without limitation, during the Amendment Period) shall be in the sole discretion of Buyer on an uncommitted basis and subject to the other terms and conditions of the Repurchase Agreement.

Section 3. Maximum Facility Amount. Subject to Section 6 hereof, Section 3(g) of the Repurchase agreement shall be amended by deleting it in its entirety and replacing it with the following:

“(g) Maximum Facility Amount. Except as set forth herein, with respect to all Transactions hereunder, the aggregate Purchase Price for all Purchased Mortgage Loans at any one time subject to then outstanding Transactions shall not exceed TWO HUNDRED MILLION DOLLARS ($200,000,000);”

Section 4. Amendment Period. For purposes of this Amendment, this Section 4 will be effective only for the period from and including the date hereof through and including May 31, 2007 (the “Amendment Period”). Subject to Section 6 hereof, the Repurchase Agreement shall be amended as follows:

(a) Section 12(m) is hereby amended by deleting the “Adjusted Tangible Net Worth” covenant therein in its entirety and replacing it with the following:

Adjusted
Tangible
Net Worth Adjusted Tangible Net Worth shall, at all times, exceed
the greater of (i) $275,000,000 (two hundred and
seventy-five million dollars) and (ii) the dollar amount
set forth in the most restrictive covenant measuring
Adjusted Tangible Net Worth contained in any agreement
between Seller and any purchaser or lender to whom Seller
sells mortgage loans or obtains financing pursuant to a
mortgage loan repurchase, warehouse lending or similar
facility.

(b) Section 12(m) is hereby further amended by deleting the “Profitability” financial covenant therein in its entirety and replacing it with the following:

Profitability Seller shall not, for the fiscal quarter ending on
March 30, 2007, have Net Income of less than negative
$65,000,000 (i.e., a loss of more than $65,000,000)
without regard to unrealized gains or losses from
Hedges during such period.

(c) Section 12(m) is hereby further amended by deleting the “Total Leverage Ratio” financial covenant therein in its entirety and replacing it with the following:

Total
Leverage
Ratio

Total Leverage Ratio shall not, at any time, exceed 18:1.

(d) Section 12(m) is hereby further amended by deleting the “Recourse Debt Leverage Ratio” financial covenant therein in its entirety and replacing it with the following:

Recourse
Debt
Leverage
Ratio


Recourse Debt Leverage Ratio shall not, at any time, exceed 7:1.

(e) Section 12(m) is hereby further amended by deleting the “Minimum Liquidity” financial covenant therein in its entirety and replacing it with the following:

Minimum
Liquidity Liquidity of Seller shall, at all times, exceed
$20,000,000. For purposes of the calculation of Liquidity
for this covenant, cash and/or Cash Equivalents shall
comprise at least 50% of Liquidity.

Section 5. Representations and Warranties. Seller hereby represents and warrants to Buyer that (a) both immediately before and after giving effect to the amendments set forth in Sections 2 and 3 of this Amendment, no Event of Default shall have occurred and be continuing, (b) the representations and warranties of Seller set forth in Section 10 of the Repurchase Agreement are true and complete as if made on and as of such date and as if each reference in said Section 10 to “this Agreement” included reference to the Repurchase Agreement as amended hereby, (c) this Amendment constitutes the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms and (d) the execution and delivery by Seller of this Amendment has been duly authorized by all requisite corporate action on the part of Seller and will not violate any provision of Seller’s organizational documents.

Section 6. Conditions Precedent. The amendments set forth in Sections 2 above shall not become effective unless on or before the date hereof,

(a) Buyer shall have received all of the following documents, each of which shall be satisfactory in form and substance to Buyer and its counsel:

(i) Amendment. This Amendment, duly completed, executed and delivered by Seller;

(ii) Other Documents. Such other documents as Buyer may reasonably request.

(b) Seller shall have received a waiver or amendment under each warehouse financing agreement or related finance agreement of Seller for breach of any (i) profitability covenant, (ii) net worth covenant and (iii) total leverage ratio.

Section 7. Miscellaneous.

(a) Except as expressly amended by Sections 2, 3 and 4 hereof, the Repurchase Agreement remains unaltered and in full force and effect. Each of the Parties hereby reaffirms all terms and covenants made in the Repurchase Agreement as amended hereby.

(b) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Party under the Repurchase Agreement, or any other document, instrument or agreement executed and/or delivered in connection therewith.

(c) THIS AMENDMENT SHALL BE CONSTRUED, INTERPRETED AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.

(d) This Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute the same agreement. Any signature delivered by a party via facsimile shall be deemed to be an original signature hereto.

[SIGNATURE PAGE TO FOLLOW]

IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed as of the day and year first above written.

SELLER:

FIELDSTONE MORTGAGE COMPANY

By: /s/ Mark C. Krebs
Name: Mark C. Krebs
Title: Sr. Vice President & Treasurer

FIELDSTONE INVESTMENT CORPORATION

By: /s/ Mark C. Krebs
Name: Mark C. Krebs
Title: Sr. Vice President & Treasurer

BUYER:

LEHMAN BROTHERS BANK, FSB

By: /s/ Fred C. Madonna
Name: Fred C. Madonna
Title: