Only days after hiring advisers, American Home Mortgage
Investment Corp. announced it will close. The subprime lender was experiencing
a liquidity crisis, leading to the hiring on July 31 of Lazard and Milestone
Advisers to help resolve the problem. Evidently, the advisers showed them the
writing on the wall that they had refused to acknowledge until now. After all,
with a third of AHM's loans being pay-option mortgages, which allowed
borrowers to pay less than the interest rate by adding to future principal
payments, it was bound to collapse like a house of cards. By Thursday
afternoon,
Newsday
reported that workers were seen streaming out of the Mellville, N.Y.,
offices, some carrying boxes and others absconding with office equipment and
even kitchen supplies.
AHM isn't the only company facing trouble. Obviously New
Century Financial Corp. and others have already filed for bankruptcy, but
lenders who had seemed immune to the problems are now feeling the heat, namely
Accredited Home Lenders Holding Co.,
which
said in a Thursday SEC document that it also could file for bankruptcy
protection soon. —Matthew Wurtzel
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story from Newsday
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story from The New York Times
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related story about Accredited from Dealscape
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