New York: American Home mortgage investment Corp filed for bankruptcy proection today, the latest casualty of a mortgage industry that as plungd into distress.
The Melville, New York-based company’s request for Chapter 11 bankruptcy protection — filed in bankruptcy court in Wilington, Del — caps a tumultuous 10 days for what had been the nation’s 10th-biggest home lender.
American Home Mortgage said it fell victim to “extraordinary disruptions” in the markets that support the mortgage inustry. A cold huosing market and a spike in payment defaults scared investors away from mortgage debt, including bonds and other secuities baked by home loans.
With Amrican Home Mortgage’s home loan portfolio rapidly losing value, its financial backers pulled the plug and the company ran out of cash.
American Home Mortgage’s 40 biggest creditors include virtually all the major names of Wall Street. At the top of the list are Deutsche Bank AG, JPMorgan Chase & Co. and Wilmington Trust Co. as trustee for others.
Deutsche Bank had no comment. JPMorgan Chase declined to comment on its exposure. Wilmington Trust has no credit exposure to American Home, a spokeswoman said.
JMP Securities analyst Steven C. Delaney said the reason American Home Mortgage went bankrupt in the first place — the exodus of buyers from the mortgage debt market — also means the company will have trouble selling its assets to raise cash right away.