AP reports AHM is still halted pending "bad news." Some of the company's financial backers want their money back because American Home Mortgage's investment portfolio has lost so much value.
The lender said it needs to keep its cash until the company gains a better grasp of how bad conditions in the mortgage market are going to become.
Those conditions include more missed payments on home loans, sagging home prices and less cash available to lenders.
Last trade $10.47 on Friday. Yahoo Finace is a decent place to check for news and such. Note the left bar where "blog news" has been added.
N.B. Using "nofollow" links as a test. Usually just clutters the desktop but feedback is requested.
20 comments:
Welcome to the free market comrade. Oh yeah, murst.
"Yahoo finace" is a bad link...
AHM started trading again...
" AHM American Home Mortgage provides update on liquidity issues; was unable to fund its lending obligations yesterday and does not anticipate funding today (10.47 +0.00)
Co reported that it is working diligently to determine how best to resolve the liquidity issues that have recently developed with respect to its business. These issues are primarily the result of the unprecedented disruption now occurring generally in the secondary mortgage market. AHM noted that this disruption has fueled concerns in the market regarding credit risk, causing many market participants to suspend the purchase of loans from a variety of originators including American Home. Accordingly, American Home is currently experiencing a hindering of access to its traditional credit facilities. Additionally, American Home's lenders have initiated margin calls in response to the decline in the collateral value of certain of the co's loans and securities held in its portfolio. The co has received and paid very significant margin calls in the last three weeks and has substantial unpaid margin calls pending. Further pressure on the co's liquidity presently exists due to its warehouse lenders effectively reducing, in this environment, their advance rate on new loans made by the Company. Based on the foregoing, the co at present is unable to borrow on its credit facilities and was unable to fund its lending obligations yesterday of approximately $300 million. It does not anticipate funding approximately $450 to $500 million today. American Home Mortgage emphasized that it is seeking the course of resolution, in this environment, that is least disruptive to its business and to the many thousands of home buyers to whom it has committed to provide mortgages. The co has retained Milestone Advisors and Lazard to assist in evaluating its strategic options and advising with respect to the sourcing of additional liquidity including the orderly liquidation of its assets."
AHM American Home Mortgage resumes trading (2.01 -8.42) -Update-
$1.70
Half a billion dollars just disappeared.
It ain't pretty, that's for sure. HAHAHAHA!!
I read this to mean that AHM needs $500,000,000 by credit or sales of assets or else it needs to file Chapter 13 or Chapter 7 protection.
Best case senario looks like AHM is out of the game, the assests it would have to sell would disable it to the point that it would no longer be a major player. It is going to take years for it to recover assuming it can.
I like the term liquidity issues it sounds like something you could fix with higher fiber in your diet. In JoeSixPack speak it means they are out of money. They own a lot of stuff that is worth less then what they owe and the bill collector needs to be paid today.
Another way to look at it is that they gave out loans at less than their costs.
Damn! Missed another one. I have PUTs on CFC, IMB and LEND. Although they are making moula, PUTs on AHM would have been a 7-8 bagger with a drop like that!
Argh!!
I like the term liquidity issues it sounds like something you could fix with higher fiber in your diet. In JoeSixPack speak it means they are out of money
Did they use the phrase "it's all good" in their press release?
;-)
Serindipty will be blamed Tom.
You gotta be happy about your LEND puts.
AHM looks like it found a bottom at $1.20 unless it is just the shorts covering before the pigs get slaughtered. IndyMac an overreaction you think?
On way back from Dr office the CNN radio business news said AHM had gone bankrupt about 30 minutes ago.
I do not see this on the CNN site, so the newsclone may have mispoken.
H.
http://money.cnn.com/2007/07/31/news/companies/american_home.reut/index.htm?postversion=2007073117
I keep hearing "Verges on Bankruptcy."
AHM has $300,000,000 in home loans it has promissed. These are people who have been aproved and are in, are in, or are about to move out of Escrow, right?
That is going to sink a lot of home sales don't you think?
"Note the left bar where "blog news" has been added. "
Do you mean the 'message board'?
And not all that $500 mil disappeared. Some of it went into shorts pockets.
I didn't have any AHM shorts but it tanking did help my DSL and LEN shorts.
Two up from message boards is:
Financial Blogs
Interesting. you are of course correct that the shorts got some of that money but what a couple tens of millions?
IndyMac an overreaction you think?
That is a clear dead cat bounce. The report was bad but not "as bad" as expected. If that warrants an increase in price, than people are truly dumber than I anticipated.
IMB is heavily in the Alt-A sector. If AHM took it in the ass, IMB is going to feel the burn too.
What is interesting is that last year, AHM sold 2/5ths of its alt-a loans to CFC, Deuche and Wells Fargo. So watch for them to take some smacks as a result. Although I think we all know how things will end up at CFC. I haven't seen insider trading like that since Enron. :-)
I honestly don't understand the Downey model so I stay away. CFC however is a local boy and I struggle to understand. They employ something like 2%+ of this county. Scary. Yes, Mozillo has a plan but that plan hit the rocks. Sure part 1 worked; extract $400m in salary and stock sales but part 2; take the company private after the implosion is screwed by the liquidity crisis and sudden distaste for reverse IPOs.
IndyMac has default rates rising 1%+ per quarter and that's as they scramble to get them off the books. Instead of dividends investors are going to be getting keys in the mail.
Yes, Mozillo has a plan but that plan hit the rocks. Sure part 1 worked; extract $400m in salary and stock sales but part 2; take the company private after the implosion is screwed by the liquidity crisis and sudden distaste for reverse IPOs
Remember the Bank of America buyout "rumor" that seemed to surface at around the time Mozilo was beginning to dump his shares in ernest? I always wondered about that one. I have a friend pretty high up in B of A and he'd never heard them even remotely contemplating that purchase. So the conspiracy theorist in me is thinking the ol' Wall Street "Blue Horseshoe loves CFC" kind of scenario. :-)
BofA was just Cramertainment talking his book. Remember that was Thu/Fri and today he is telling everyone to bail on the financials and anything exposed to housing. Got his blue ball out of the game first.
The lender said it needs to keep its cash until the company gains a better grasp of how bad conditions in the mortgage market are going to become.
Good things are coming! They need to keep all their options open and not loose (tm) any crazy opportunities that might come up very soon. It's all good. Company CEO and board members will be taking a power nap to restore their vital energies before deciding how best to proceed. Word on the street is that Cashcall is willing to bail them out.
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