Wednesday, August 1, 2007

The Fall of American Home Mortgage

I have never worked a day in my life for American Home Mortgage but I sure feel like I did. The spectacular fall yesterday of the company’s stock price, plunging 90% in one day, and the near certain bankruptcy filing that the company is going to go through leaves me with a feeling of sadness. Twenty months ago American Home Mortgage bought out Waterfield Mortgage Company, at the time the largest privately held mortgage company in the country.

Waterfield is the company that I really got my start. I survived the refinance/mortgage boom at Waterfield. I learned the mortgage market there. I learned pretty much everything I know financially while I worked at Waterfield. I owe them the job that I have now, even though it was at the expense of my job with them. So when American Home Mortgage swept in and bought my company, it was the end of Waterfield. 850 jobs were lost and only 100 remained or were able to latch on with American Home. A lot of my friends were left out in the cold and never saw it coming.

Even with the staggering number of jobs lost in our market there was some hope. American Home had not ended operations in our market altogether. One hundred people still had their jobs and better yet in the last 6 months American Home had added 55 more and were advertising that they were hiring for a number of positions. They were even bringing back a number of old Waterfield employees, including a couple of very close friends.

But the fact remains, everyone who has worked in the mortgage market, who has any idea how the market works, knew that the fallout we are starting to see was going to happen. It was just a matter of when and who. And this isn’t the end of the fallout. This won’t end with American Home Mortgage. Lenders, Builders, and Investors are all feeling the crunch. Many more will not survive. News today that Beazer Homes likely will not survive this downturn surfaced and their stock stumbled significantly. Beazer disputes the claims of imminent bankruptcy. And the fed isn’t coming to bail them out this time either. They created this mess to begin with. This really is the fallout from the stock market bursting in 1999/2000.

This has more ramifications than just stock price, the interest rate you pay on your mortgage, and whether you get an adjustable rate mortgage or not. It has to due with people. Anyone who has a mortgage in process with American Home Mortgage is going to have to find a new lender. Brokers who work with the company will have to find someone else to send their mortgages through. Jobs are lost. Friends are impacted. I'm sad today because American Home Mortgage was all that I had left of Waterfield, and that too has been taken away.

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