CU Lender American Home Mortgage Files for Bankruptcy

WILMINGTON, Del. – American Home Mortgage, the mortgage bank for dozens of credit unions, filed for bankruptcy yesterday, leaving hundreds of mortgages for credit union members unfunded. Two other mortgage lenders also said yesterday they were not accepting new applications, signs that the worst housing crunch in decades could be widening. American Home Mortgage, based in Melville, N.Y., and once the nation's 10th largest mortgage lender, said it fell victim to “extraordinary disruptions” that effectively cut off the funding it needed to make new loans. American Home acquired mortgage offices in more than 50 credit unions last year when it bought the mortgage operations of Irwin Financial. Also yesterday, Aegis Mortgage Corp. of Houston said it would not accept any more applications and said it could not meet all of its existing funding obligations. Cleveland-based National City Corp. also stopped taking applications for new loans and lines of credit in its wholesale home equity unit. American Home Mortgage filed for Chapter 11 bankruptcy protection in Wilmington, Del. Its 40 biggest creditors include virtually all the major names of Wall Street. At the top of the list are Deutsche Bank AG and JPMorgan Chase & Co.