Franklin Credit Announces Hedge Agreements

Franklin Credit Management Corporation, a specialty consumer finance company primarily engaged in the acquisition, origination, servicing and resolution of performing, reperforming and nonperforming residential mortgage loans, today announced that it has entered into interest rate cap agreements that will hedge a portion of its interest-rate-sensitive term debt against future increases in short-term interest rates.

Effective August 29, 2006, the Company purchased a $300 million (notional amount) one-month LIBOR cap with a strike price of 5.75%, and effective August 30, 2006 a $500 million (notional amount) one-month LIBOR cap with a strike price of 6.0%. Both cap agreements are non-amortizing and will be in effect for one year, and the cap resets match the interest rate resets on the Company's term debt. These caps will limit the Company's exposure to increased borrowing costs on $300 million of term debt should the 30-day LIBOR rate exceed 5.75%, and on a total of $800 million of term debt should such rate exceed 6.0%.

"We were able to take advantage of very favorable cap pricing in the capital markets to partially limit our exposure to further increases in short-term interest rates should the 30-day LIBOR rate rise above certain levels," noted Paul Colasono, Chief Financial Officer of Franklin Credit Management Corporation. "This marks the first time Franklin Credit has utilized the capital markets to hedge a portion of its interest rate risk."

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