More Homeowners Woes as American Home Mortgage and its Former Backers Face Off

As New York-based American Home Mortgage Investment Corp, once one of the country's biggest mortgage lenders, and its formers financial backers clash, thousands of homeowners face the risk of losing their homes, according to government-chartered housing financier Freddie Mac.  
 
Freddie Mac in documents filed with the U.S. Bankruptcy Court in Wilmington, Del., stated that it seized $7 million that homeowners sent to American Home to cover principal and interest payments, property taxes and insurance just before the company's August 6 collapse. American Home quit making payments to tax authorities and insurance companies on August 24th. 
 
In addition, the government agency stated that 4,547 loans valued at nearly $797 million are at stake. It said it doesn't have the loan files necessary to pay insurance premiums and property taxes on them, however. "Therefore, there is the imminent risk that borrowers' insurance policies may lapse for non-payment, subjecting the borrowers to a risk of loss of their mortgaged properties," Freddie Mac said. 
 
Property-tax bills will go unpaid, Freddie Mac said, "resulting in increased tax liabilities and possible tax-foreclosure sales." It added it needs a court order allowing it to seize American Home's loan files "to avoid these serious consequences stemming from AHM's inability to service the Freddie Mac mortgage loans." 
 
The wave of mortgage-lender bankruptcies in the past few months has disrupted loan-servicing arrangements and triggered court fights over who should get control of the files necessary to service the loans, court documents show. 
 
American Home has resisted demands that it give up loan-servicing files, hoping to auction its loan-servicing business intact in an effort to raise money for creditors. Loan-servicing businesses have proven to be among the few valuable assets left in the wreckage of the failed lenders. Some of Wall Street's biggest investment banks are fighting for control of them. 
 
American Home once serviced about $50 billion in mortgages. When it filed bankruptcy, concern was generated at Freddie Mac and Ginnie Mae, an agency that is part of the Department of Housing and Urban Development. 
 
Just days before American Home's bankruptcy filing, Freddie Mac and Ginnie Mae terminated the company's loan-servicing rights. They also sent representatives to collect loan files from American Home's servicing facility in Irving, Texas. 
 
In court documents, American Home said Ginnie Mae representatives "stood in a line in front of the doors and sat on the stairs, preventing AHM Servicing employees from entering the office." Freddie Mac said American Home "had its security personnel escort the Freddie Mac representatives out." 
 
Ginnie Mae's senior vice president, Theodore B. Foster, in an interview last week said that his agency had seized from American Home some of the insurance and tax payments collected from homeowners. "What's occurred is that we have the money, but AHM hasn't been able to or willing to pay the taxes and insurance, and they have the loan records," Mr. Foster said. "Therefore, we don't know who to pay, and we don't know how much."