The battered mortgage-lending industry will suffer another blow today as American Home Mortgage shuts down, making it the latest company to go under as home loans go bad across the country. AHM's troubles were common knowledge, the Times reports, but the speed of its downfall was unexpected. “We have no realistic alternative,” says the CEO.
The lender reported record earnings—and appeared to be on track to rebound—at the beginning of the year, but things went sour quickly. AHM was one of the largest and fastest-growing mortgage companies in the country, but its focus on less qualified borrowers and ARMs combined with industry turmoil and the housing downturn to create an unsolvable problem.