In connection with a proposed private placement of securities, Anthracite Capital, Inc., a Maryland corporation (the “Company”), has prepared an Offering Memorandum for distribution to potential purchasers. The securities to be issued in the proposed private placement will not be registered under the Securities Act of 1933, as amended, and will not be offered or sold absent registration or an applicable exemption from registration requirements. The “Recent Developments” section from the Offering Memorandum is set forth below:

Recent Developments

            The current situation in the sub-prime mortgage sector and the current weakness in the broader mortgage market have resulted in reduced liquidity for mortgage-backed securities. Although this reduction in liquidity has been directly linked to sub-prime residential assets, to which sector we have no direct exposure, there has been an overall reduction in liquidity across the credit spectrum of commercial and residential mortgage products.

            In the event of a further reduction in market liquidity, our short-term (one year or less) liquidity needs will be met primarily with $107.7 million of cash and cash equivalents we held as of June 30, 2007.  Subsequent to June 30, 2007, as the capital markets have been marking down the value of credit-sensitive securities regardless of performance, we have taken further steps to bolster our cash position.

            Subsequent to June 30, 2007, we sold a portion of our high credit quality, liquid securities consisting of CMBS interest-only securities and multifamily agency securities to further increase our liquidity. Due to higher Treasury rates since the time of purchase, these sales also generated a loss, which we currently expect will be approximately $14 million and for accounting purposes will be reported in the statement of operations for the third quarter of 2007. In connection with the sales of these securities, we also closed out several interest rate swaps at an economic gain currently expected to be approximately $7 million, a portion of which will be recognized in the third quarter of 2007 and the remainder of which will be recognized over the remaining life of the swap. We are unable to determine how much of the economic gain will be recognized in the third quarter of 2007 until the end of the third quarter. The swaps were hedging portions of our floating-rate liabilities incurred to hold these securities.

            In July 2007, we received $25.0 million of cash from a partial redemption of our investment in the BlackRock Diamond Property Fund (“BlackRock Diamond”). Additionally, we have requested the redemption of our remaining investment in BlackRock Diamond at its September 30, 2007 net asset value. The proceeds from this redemption are expected to be approximately $100.0 million and are expected to be received in October 2007. The net asset value can vary depending upon the valuation of BlackRock Diamond’s underlying assets at September 30, 2007. While additional cash is not needed for liquidity purposes at this time, we believe having excess cash on hand will provide an additional measure of balance sheet strength. We may incur borrowings and pledge our remaining interest in BlackRock Diamond as security for such borrowings in the near future.

             Our liquidity may also be adversely affected by margin calls under our repurchase agreements and credit facilities that are dependent in part on the valuation of the collateral securing the financing. Our repurchase agreements and credit facilities allow the counterparties