Industry News

Subprime problems spreading to Alt-A loans

American Home Mortgage to close, IndyMac tightening standards

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American Home Mortgage Investment Corp will reportedly close its doors Friday and lay off its workforce, after announcing Tuesday that it could no longer fund loans. "It is with great sadness I announce today that American Home Mortgage has been forced to close," company Chairman Michael Strauss told employees in an e-mail, Forbes reported. "Unfortunately, the market conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that our business is no longer viable." Founded in 1988, the Alt-A lender made nearly $60 billion in loans in 2006 and employed 7,400 people, Bloomberg News said. Alt-A loans are those made to borrowers with better credit than subprime borrowers, but with issues that prevent them from receiving prime loans. Bloomberg estimates American Home would be among more than 70 or more mortgage lenders that have closed or been acquired by competitors as home-price appreciation slows or reverses and delinquencie...