SHELTON, Conn., May 12 /PRNewswire-FirstCall/ -- Clayton Holdings, Inc.(Nasdaq: CLAY), a leading provider of information-based analytics, consultingand outsourced services for capital markets firms, lending institutions, fixedincome investors and loan servicers, today announced a loss from continuingoperations of $6.6 million on revenues of $19.1 million for the first quarterended March 31, 2008.

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    Key Financial Highlights (unaudited, amounts in millions, except per sharedata):
                                                       Percent                                                       Increase    Quarter Ended March 31,           2008     2007   (Decrease)    -----------------------          ------   ------  ----------
      Revenue                        $19.1    $53.4     (64.2)%      Gross Profit                     8.5     19.6     (56.8)%      (Loss) Income from Continuing       Operations                     (6.6)     1.6      n/a      Net Loss                        (6.6)    (2.3)     n/a
      (Loss) Earnings Per Share -       Diluted         Continuing Operations      $(0.31)   $0.08      n/a         Discontinued Operations         -    (0.19)   (100.0)%                                    -------  -------         Total                      $(0.31)  $(0.11)     n/a                                    =======  =======
      Adjusted Net (Loss) Income -       Continuing Operations (non-        GAAP)*                       $(5.4)    $3.2      n/a      Adjusted (Loss) Earnings Per       Share - Continuing       Operations (non-GAAP)*       $(0.25)   $0.15      n/a
      Diluted Shares Outstanding      21.0     21.6      (2.7)%
      Gross Profit Margin -       Continuing Operations         44.3%    36.8%       20.4%
    * Adjusted net (loss) income from continuing operations excludes the      following items, net of tax: acquisition-related amortization, loss on      extinguishment of debt and merger-related expenses.  For a      reconciliation of net (loss) income from continuing operations to      adjusted net (loss) income from continuing operations, please refer to      the tables on the following pages.

Due to the merger agreement noted below, management will not be holding aconference call to discuss this earnings release. The Company anticipatesfiling its quarterly report on Form 10-Q after the market closes today.

   Other Highlights:
    -- As previously announced on April 14, 2008, we have agreed to be       purchased by an affiliate of a fund managed by Greenfield Partners,       LLC, a private equity firm, who will acquire all of the outstanding       common shares of Clayton Holdings, Inc. for $6.00 per share.
    -- As of March 31, 2008, Clayton Surveillance was monitoring approximately       $434 billion in assets primarily for investment banks and institutional       investors in mortgage-backed securities.  Revenues from our       Surveillance business were $10.1 million in the quarter.
    -- Gross margin from continuing operations was 44.3% for the three months       ended March 31, 2008, as compared to 36.8% in the first quarter of       2007. This was the result of a shift in the business mix to higher       margin product offerings and the implementation of operating       efficiencies.
    -- As previously announced, on February 21, 2008, Clayton executed an       amendment to its debt facility, including the waiver of certain       financial covenants until March 31, 2009.  In connection with the       amendment, $25 million of debt was prepaid.

About Clayton Holdings, Inc.

Clayton Holdings, Inc., headquartered in Shelton, Connecticut, is aninformation and analytics company serving leading capital markets firms,lending institutions, fixed income investors and loan servicers with a fullsuite of information-based analytics, specialty consulting and outsourcedservices. Clayton's services include due diligence analytics, conduit supportservices, professional staffing, compliance products and services, credit riskmanagement and surveillance and specialized loan servicing services.Additional information is available at www.clayton.com.

Safe Harbor Statement

Certain items in this press release may constitute forward-lookingstatements within the meaning of the 'safe harbor' provisions of the PrivateSecurities Litigation Reform Act of 1995. These statements are based onmanagement's current expectations and beliefs and are subject to a number oftrends and uncertainties that could cause actual results to differ materiallyfrom those described in the forward-looking statements. Clayton can give noassurance that expectations will be attained. Factors that could cause actualresults to differ materially from Clayton's expectations include, but are notlimited to, adverse changes in the mortgage-backed securities market, themortgage lending industry or the housing market; the level of competition forClayton's services; the loss of one or more of Clayton's largest clients;Clayton's ability to maintain its professional reputation; management'sability to execute Clayton's business strategy; Clayton's ability to recruitand retain additional qualified independent loan review specialists; and otherrisks detailed in Clayton's Annual Report on Form 10-K, as amended, filed withthe Securities and Exchange Commission and other reports filed with theSecurities and Exchange Commission. Such forward-looking statements speakonly as of the date of this press release. Clayton expressly disclaims anyobligation or undertaking to release publicly any updates or revisions to anyforward-looking statements contained herein to reflect any change in Clayton'sexpectations with regard thereto or change in events, conditions, orcircumstances on which any such statement is based.

Reconciliation of Non-GAAP Measures

This earnings release contains non-GAAP financial measures.