American Home Mortgage Investment Corporation
(NYSE:AHM) shares fell $9.32, or 89.02%, to $1.15 after its shares
resumed trading after a day and a half of being halted. The company
announced that it was facing serious liquidity issues amid a flood of
margin calls from lenders and has hired advisors to evaluate its
options, which could include a liquidation of its assets.
The
mortgage lender confirmed that it had already received and paid "very
significant" margin calls during the past three weeks and has
"substantial" unpaid margin calls pending. To compound the problems,
AHM also said it was unable to borrow on its credit facilities at
present and is unable to fund its lending obligations. Investors pushed
the stock down today on concerns that the company will be unable to
meet its obligations and be forced to liquidate. In fact, the company
revealed just today that it has hired Milestone Advisors and Lazard to
help it in evaluating its strategic options and to obtain additional
funds.
The news comes after widespread troubles in the mortgage
sector lasting upwards of six months. Subprime lenders that lend to
people with poor credit were the first to suffer a rise in
delinquencies and defaults with more than a dozen brokers declaring
bankruptcy. Many are hoping that this three year problem will be
resolved eventually as lending requirements are tightened and subprime
lenders undergo some consolidation and recapitalization.
Related CompaniesFannie Mae (FNM)Delta Financial Corporation (DFC)Clayton Holdings (CLAY)