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Wow, big news day as American Home Mortgage stock tanks 85% after trading is resumed and a whole flurry of news and reports hit the wire after the company makes an official announcement (emphasis mine):
American Home Mortgage noted that this disruption has fueled concerns in the market regarding credit risk, causing many market participants to suspend the purchase of loans from a variety of originators including American Home. Accordingly, American Home is currently experiencing a hindering of access to its traditional credit facilities. Additionally, American Home’s lenders have initiated margin calls in response to the decline in the collateral value of certain of the Company’s loans and securities held in its portfolio. The Company has received and paid very significant margin calls in the last three weeks and has substantial unpaid margin calls pending. Further pressure on the Company’s liquidity presently exists due to its warehouse lenders effectively reducing, in this environment, their advance rate on new loans made by the Company.
Based on the foregoing, the Company at present is unable to borrow on its credit facilities and was unable to fund its lending obligations yesterday of approximately $300 million. It does not anticipate funding approximately $450 to $500 million today.
Unfortunately I am swamped today and can only link you over to the sites doing an excellent job covering this developing story. Here are some worthwhile links for those looking for more information on the American Home Mortgage (AHM) (perceived?) meltdown.
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