American Home Mortgage Investment filed for Chapter 11 bankruptcy protection yesterday in Wilmington, Del., capping a tumultuous 10 days for what had been one of the nation’s biggest home lenders.
The company, based in Melville, N.Y., said it fell victim to “extraordinary disruptions” in the markets that support the mortgage industry. A weak housing market and a spike in payment defaults scared investors away from mortgage debt, including bonds and other securities backed by home loans.
As the company took its first steps in restructuring, two other lenders — Aegis Mortgage and the mortgage unit of National City — said yesterday that they had stopped taking or had suspended loan originations.
At American Home Mortgage, the company 40 biggest creditors include many of the major names on Wall Street. At the top of the list are Deutsche Bank and JPMorgan Chase.
Both banks had no comment yesterday
A JMP Securities analyst, Steven C. Delaney, said the reason American Home Mortgage went bankrupt — the exodus of buyers from the mortgage debt market — also meant the company would have trouble selling its assets to raise cash.