Institutional and Hedge Fund Investors Are Advised Of Class Action Filed Against Homestore.com by Donovan Searles, LLC

PHILADELPHIA, PA January 9, 2002 -- The law firm of Donovan Searles, LLC, announced today that a class action lawsuit was filed in the United States District Court for the Central District of California against Homestore.com, Inc. ("Homestore.com"), Stuart H. Wolff, Peter B. Tafeen, John M. Geisecke Jr., and Joseph J. Shew (the "Individual Defendants"), on behalf of all persons who purchased Homestore.com (NASDAQ: HOMS) securities between July 20, 2000 and December 21, 2001, inclusive (the "Class Period"), Case No. 02-0011.

The Complaint charges Homestore.com and the Individual Defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Complaint alleges that as part of their effort to boost the price of Homestore.com securities, defendants misrepresented Homestore.com’s true prospects in an effort to conceal Homestore.com’s improper acts until the Individual Defendants were able to sell at least $16 million of their own Homestore.com stock. In particular, defendants overstated Homestore.com’s revenues and assets in 2Q 00, 3Q 00, 4Q 00, 1Q 01, 2Q 01 and 3Q 01, in violation of Generally Accepted Accounting Principles and SEC rules. On December 21, 2001, Homestore.com disclosed that the board of directors was conducting an inquiry into the Company's accounting practices. The Company then announced that it would restate certain of its financial statements. In response to this announcement, the NASDAQ stock market halted trading of Homestore.com’s stock. On January 2, 2002, Homestore.com announced that the Company had overstated its on-line advertising revenues in the first 3 quarters of 2001 by between $54 million and $95 million in connection with certain advertising transactions that should have been accounted for as barter transactions.

The Complaint alleges that defendants knew that Homestore.com’s revenues were inflated and sold thousands of shares of their holdings while in possession of that adverse information. The Complaint further alleges that defendants’ misrepresentations caused the price of Homestore.com securities to be artificially inflated throughout the Class Period.

Plaintiff is represented by the law firm of Donovan Searles, LLC and others. The members of Donovan Searles, LLC have significant experience in litigating class actions on behalf of individual and institutional investors and shareholders. The firm maintains a website at http://www.donovansearles.com

If you are a member of the class described above, you may move the court to serve as lead plaintiff by February 25, 2002. In particular, institutional or hedge fund investors purchasing large positions in Homestore.com during the Class Period may want to assert an active role in the litigation, though they are not required to do so. If you wish to discuss this action, or have any questions concerning your rights, please contact Michael D. Donovan at Donovan Searles, LLC, 1845 Walnut Street, Suite 1100, Philadelphia, PA 19103; phone: (800) 619-1677 or (215) 732-6067; e-mail: mdonovan@donovansearles.com or by clicking here

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