American Home Mortgage Investment Corp. is facing liquidation as they are unable to find additional funding. After being cut off from credit, American Home had it’s share stop trading yesterday.

Another tough hit for the mortgage industry as American Home Mortgage specialized in Alt-A loans. The subprime market has for the most part shut down, now Alt-A lenders who focused on borrowers that were just off prime are now in big trouble.

The company has been cut off from credit and didn’t have money yesterday to make $300 million of mortgages it had already agreed to provide, the Melville, New York-based company said today in a statement. American Home said it anticipates $450 million to $500 million of loans probably won’t get funded today.
American Home said it’s “seeking the course of resolution, in this environment, that is least disruptive to its business and to the many thousands of homebuyers to whom it has committed to provide mortgages.” The company said it hired Milestone Advisors and Lazard Ltd. to evaluate “strategic options.”

Bids from investors for American Home’s loans began falling earlier this year after defaults on U.S. subprime mortgages rose to the highest level since 2002. Investors were concerned that the lax underwriting standards and growing fraud might presage rising defaults on Alt-A loans.
American Home had to pay “very significant margin calls” in the last three weeks and still has “substantial unpaid margin calls pending,” it said in the statement. Options may include “the orderly liquidation of its assets.”  Bloomberg .

Related posts:

1. Circuit City Liquidation Hurting Landlords Hard
2. Is The Average American Home Shrinking? For Now It Is
3. Mortgage Bankers Association Propose Dismantling of Freddie, Fannie
4. Strategic Mortgage Defaults Rising in Hard Hit Regions
5. Lenders Buried Under Load of Mortgage Re-Works