American Home Plans Loan Sale as Home Prices Fall

Bad news hammered the mortgage industry this week, though one bankrupt lender hopes to put some of its mortgages up for sale in February, creating opportunity for debt buyers and collectors.

American Home Mortgage Investment Corp. asked a bankruptcy court for permission to sell pools of mortgages where delinquent borrowers owe $164 million in principal on the loans, according to a story yesterday by the Associated Press. American Home in August declared bankruptcy after firing about 90 percent of its staff.

American Home filed a request with the U.S. Bankruptcy Court in Wilmington, Del., to sell three pools of 618 non-performing loans where borrowers are more than 60 days past due, the AP reported.

JPMorgan Chase has an interest in 327 loans; Bank of America in 208 loans; and a pool of 83 loans are subject to liens by American Homes’ bankruptcy lenders. American Homes asked for a Jan. 25 deadline for indicative bids, and a Feb. 11 deadline for formal, binding bids. The court is scheduled to rule on the request on Jan. 14, the AP reports.

News for home owners continued to be lousy.

The price of existing single-family homes tumbled 6.7 percent to a record low in October, according to the Standard & Poor’s/Case-Shiller Home Price Indices released yesterday. The index represents a composite price for 10 major metro areas. A similar index for 20 metro areas fell 6.1 percent in October with 11 of the areas reporting record declines for a single month.

The market for home loans dried up earlier this month with mortgage application volume dropping 7.6 percent for the week ending Dec. 21, according to the Mortgage Bankers Association weekly application survey. Refinance volume fell 8.5 percent and purchase volume declined 6.6 percent, the association found. The association’s index is now at 603.8, down more than 67 percent from its peak of 1,856.7 during the week of May 30, 2003.