The housing market and the credit market team up on American Home Mortgage.
The most interesting facets in American Home Mortgage‘s abrupt collapse are these:
- While it has suffered from the big slump in US housing market and the collapse of the subprime mortgage industry, A.H.M. itself didn’t wallow in subprime loans. (It did make loans to customers whose credit ratings put them in the category above subprime but below prime.)
- Last year the company had about $2.2 billion in sales on $59 billion of loans originated. Even last week it said that it would weather the storm in the credit markets. Yet this morning nearly 90% of its workforce was shown the door.
This can hardly be the last we’ll see of the shakeup in the credit markets. If you’re a company involved at all in real estate or any sort of lending, now is a better time than ever to have a clean balance sheet and outstanding bond ratings.
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[...] adjustors and the like will go out of numbers in droves — as when American Home Mortgage collapsed — and it stinks that the folks down the ladder suffer that way for the mistakes of their [...]