The mortgage market was beginning to look like ducks in a shooting gallery last week after a devastating amount of bad news. The injured participants, C-BASS, NovaStar Financial, American Home Mortgage Investment Co., HomeBanc, Impac Mortgage Holdings, National City Corp., Luminent Mortgage Capital and Aegis Mortgage Corp., among others, took a beating. Some were more crippled than others.
The most severe news came from American Home Mortgage. The company announced not only that it was closing all but its thrift and servicing businesses and laying off 6,250 of its 7,000 employees, but also that it was filing for Chapter 11. AHM said it is highly unlikely that its values will be sufficient to pay its creditors in full - its listed debts are more than $100 million - and no shareholder equity value will likely be remaining. The firm also said it wants to auction its loan-servicing business and loan portfolio. Bids are due Aug. 29.