PDATE: American Home Mortgage Files For Bankruptcy Protection
24 minutes ago - Dow Jones News
By John Spence
BOSTON (Dow Jones) -- After laying off nearly all of its staff and
closing down most of its business operations, American Home Mortgage
Investment Corp. on Monday filed Chapter 11 bankruptcy.

The filing caps off the rapid demise of a real-estate investment trust
(AHM) that once ranked as the No. 10 mortgage lender in the U.S.

The Melville, N.Y.-based company submitted its application for
protection from creditors in U.S. Bankruptcy Court in Delaware.

Last week, the company said it was cutting most of its 7,000 workers
and would no longer accept mortgage applications. American Home
Mortgage had been facing margin calls from its own lenders following
the recent shakeup in the mortgage markets.

The trouble started in subprime mortgages, which are designed for home
buyers with shakier credit histories, but has spread into other credit
markets. Delinquencies have surged after the housing bust, which has
strained lenders who wrote the loans.

Last week, shares of Accredited Home Lenders Holding Co. (LEND)
plunged after the company said it was getting margin calls -- demands
from creditors for more payment or collateral. The lender warned it
may not be able to survive as a going concern.

Other mortgage lenders, such as Countrywide Financial Corp. (CFC) and
IndyMac Bancorp Inc. (IMB) , have also come under pressure as a result
of the turmoil in the mortgage market.

Last week, Standard & Poor's lowered its ratings outlook on Bear
Stearns Cos. (BSC) , in part due to blowups at hedge funds that made
bets on riskier mortgage loans.