Industry News

American Home bankruptcy could create problems for homeowners

Freddie Mac alleges loan servicer not making tax, insurance payments

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The bankruptcy of American Home Mortgage Investment Corp. could create headaches for thousands of homeowners because the loan servicer is allegedly collecting property tax and insurance premiums that are not being passed on to those who are owed. Government-sponsored mortgage repurchaser Freddie Mac said it has seized $7 million in payments homeowners sent to American Home before the company's Aug. 6 bankruptcy filing. Freddie Mac alleges the company stopped making payments to government tax collectors and insurance companies on Aug. 24, the Wall Street Journal reports. Freddie Mac is seeking to block the sale of servicing rights to more than 4,000 loans American Home is currently collecting payments on, saying homeowners are at risk of losing their insurance policies because of nonpayment of premiums, and that unpaid tax bills could eventually force tax foreclosure sales. American Home services about $50 billion in mortgages, and other lenders seeking to reclaim servicing rights to th...