Aug. 6 (Bloomberg) -- American Home Mortgage Investment Corp. became the second-biggest residential lender to file for bankruptcy protection this year, adding to signs that late payments have spread to homeowners with good credit records.
The company sought federal court protection from creditors in Wilmington, Delaware, today, saying it had assets of more than $100 million and debts of more than $100 million owed to more than 100,000 creditors. The filing comes after the company announced Aug. 2 it would halt operations and slash staff.
American Home specialized in mortgages for people who fall just short of top credit scores. More than half a dozen competitors have declared bankruptcy this year as defaults spilled over from ``subprime'' borrowers with the worst repayment records to those with more reliable payment histories.
``Their sources of funding have all dried up,'' said Mark T. Power, an attorney who is representing some creditors in the case. ``This case is going to be very similar to New Century.''
New Century Financial Corp., based in Irvine, California, became the largest home lender to seek court protection from its creditors when it filed for bankruptcy in April. The company is now being liquidated. Melville, New York-based American Home also is probably going to be forced to liquidate, Power said in an interview Friday, after American Home told employees that it was planning to declare bankruptcy.
American Home Files: Bankrupt
Started by
Rogerdodger
, Aug 06 2007 09:03 PM
2 replies to this topic
#1
Rogerdodger
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#2
ogm
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Posted 06 August 2007 - 09:58 PM
Aug. 6 (Bloomberg) -- American Home Mortgage Investment Corp. became the second-biggest residential lender to file for bankruptcy protection this year, adding to signs that late payments have spread to homeowners with good credit records.
The company sought federal court protection from creditors in Wilmington, Delaware, today, saying it had assets of more than $100 million and debts of more than $100 million owed to more than 100,000 creditors. The filing comes after the company announced Aug. 2 it would halt operations and slash staff.
American Home specialized in mortgages for people who fall just short of top credit scores. More than half a dozen competitors have declared bankruptcy this year as defaults spilled over from ``subprime'' borrowers with the worst repayment records to those with more reliable payment histories.
``Their sources of funding have all dried up,'' said Mark T. Power, an attorney who is representing some creditors in the case. ``This case is going to be very similar to New Century.''
New Century Financial Corp., based in Irvine, California, became the largest home lender to seek court protection from its creditors when it filed for bankruptcy in April. The company is now being liquidated. Melville, New York-based American Home also is probably going to be forced to liquidate, Power said in an interview Friday, after American Home told employees that it was planning to declare bankruptcy.
AHM was simply forced out of business. They have overleveraged themselves and when the loan repricng has started , the lenders saw the opportunity, discounted their collateral and forced them to BK. They will pick up their loans cheap and make good money. And AHM were played as suckers, because they took out heavy leverage.
Same thing with Sowood, for example. Look how it lost 50% of value, closed doors, and then JPM has gobbled up their whole portfolio with Citadel. Guess who'll make money ?
#3
vitaminm
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