American Home Mortgage can't figure out who owns the mortgages -- so destroy 'em?

Posted Feb 11th 2008 3:18PM by Zac Bissonnette
Filed under: Housing

The fallout from the subprime crisis has gone from merely scandalous to the downright ridiculous.

American Home Mortgage has files for 490,000 loans sitting in a warehouse (at a cost of $45,000 per month), and it can't even figure out who owns the loans because they've been bought and sold so many times since they were issued sometime after September of 2005.

So American Home Mortgage has a brilliant idea for what to do with them: Burn them!

Not so fast, say Wall Street investors who claim that the files can help them prove that they are their rightful owners.

According to the Wall Street Journal(subscription required), "The Melville, N.Y., mortgage lender, which is liquidating its assets in bankruptcy proceeding, made the offer to counter opposition from former backers who said American Home's plan to destroy the files endangered their rights to enforce the loans."

The fact that it's hard to tell who owns the loans is an interesting symbol of how crazy the real estate market became: people were signing off on loans and it wasn't even clear who the ultimate lender of the money was.

This moral hazard was probably a prime contributor to rampant mortgage fraud.

Tags: American Home Mortgage, AmericanHomeMortgage, inthenews, loans, mortgages, subprime

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Reader Comments (Page 1 of 1)

2-14-2008 @ 6:09PM

Mar said...

The Problem is SPENDING by the GOVERNMENT when they print Trillions of dollars to Give Iraqi Freedom and Bailout Bush Buddies from their FRAUD on each other. Covering up their criminal acts with more criminal acts. When the president and congress lie cheat and steal, it set the example for Investment companies, Banks, investors and borrowers. All this spending and corruption, caused the Arabs to look at the real value of dollar. Devalued the Dollar which is why the Oil price shot up. Call it the "Oil Standard" with the falling dollar it could go to $200/bbl. Almost 10 times what it was when Bush took office. Thus the price of everything imported went up the same amount, because we are buying with dollars that are worth less. Your House, stocks, retirement funds everything tied to the dollar is worth less 50% less in 7 years. Thanks to Bush and Congress. Impeach Bush and Congress. Elect Ron Paul s. http://www.bloggingstocks.com/2008/02/14/the-best-explanation-of-the-subprime-mess-ive-ever-seen/

4-01-2008 @ 11:02AM

Dan Tuttle said...

I am a American home mtg customer. I sent my payment in March 7th and it has not come out of my account. I have had this house for twenty years and no mtg comp has ever not received my payment. I cannot get through on the 1800 line their 797 area code # is disconnected and americanhm.com is not there. Anyone have any ideas? Thanks

4-16-2008 @ 12:04PM

Bruce said...

I purchased American Home stock in June of '07. Should I consider selling (if thats even possible and taking the loss or hang on and hope AHM comes back?????