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 their loans include Ginnie Mae, Morgan Stanley, Deutsche Bank AG, Credit Suisse Group and EMC Mortgage, the Journal reported.
American Home is fighting those efforts as a Sept. 24 auction of its loan-servicing business approaches. The legal battle is being fought in the United States Bankruptcy Court for the District of Delaware.
The blog Housing Wire has posted several bankruptcy court documents on the pending auction, including objections to the sale filed by Freddie Mac, Deutsche Bank, Bear Stearns and Countrywide.
The documents reveal that American Home is servicing 1,350 loans for Countrywide valued at $484 million, and 4,547 loans for Freddie Mac valued at $797 million.