Home mortgage: American Home Mortgage Investment Corporation

American Home Mortgage Investment Corporation (AHMIQ) was the tenth largest mortgage lender in United States of America and it was structured as a REIT, i.e. real estate investment trust. Unfortunately this company has filed for bankruptcy. The company focused on earning income from loans that it originated, mortgage based securities (MBS) and subsidiaries which are taxable. They generated loans with the help of their employees and mortgage brokers. These loans were processed in Irving, Texas where their servicing center is located.

The company filed their bankruptcy case in the Wilmington Delaware federal court on the 6^th of August 2007.  The company had announced that the lenders were demanding their money back and that the company did not have enough funds. They were also not able to deliver eight hundred million dollars which were commitments towards housing loans. They lay off almost ninety percent of their employees before official case filing.

The company was founded in 1987. At the time it was located in New York. In 1999 the company started public trading. 2000 saw its headquarters being shifted to Melville, NY. The company was involved in generation and servicing of mortgages since its initial days. The company became a REIT after it acquired Apex Mortgage Capital. The company had a change of name to American Home Mortgage Investment Corp. It started being listed in NYSE. The company did very well in 1999. They acquired Marina Mortgage, Irvine, CA; First Home Mortgage, Mt Prospect, IL; Waterfield Financial, Irwin Mortgage and more than eighty Washington Mutual offices.

It was in July 2007 that the company announced its financial difficulties and suggested liquidation as the sole source for crisis management. This announcement is evidence that credit quality and defaults by home owners can bring about financial chaos. It is very definite that this mess extends beyond sub prime lending. Thus the company has to undergo bankruptcy which leaves the share holders with nothing. American home specializes in prime loans but also has extended to loans to borrowers with only less documentation of assets and income. This is commanding around 2.5% of the US lending scenario.

The statement by Michael Strauss that was made to the company detailed its financial problems. He claimed that secondary mortgages and national real estate market has deteriorated to such an extent that the company cannot be viable. The payroll details and benefits were discussed before the statement ended. Thus it was the last day of employment for many people associated with the company.

A western part of this company was believed to be purchased by IndyMac Bank. These employees were lucky, but not for long. IndyMac was also a failure and American history would not forget it since it was the largest bank failure. The bank was placed in conservatorship under FDIC in 2008. The bank also filed for bankruptcy protection under chapter 11.

Thus recession has taken its toll on American banks and financial companies. Quick fixes are required to prevent further deterioration of the situation. The new government and its stimulus package hopefully would do the miracle.