According to Forbes, American Home Mortgage will be cutting more than 7000 employees today (Friday).
“It is with great sadness that American Home has had to take this action which involves so many dedicated employees,” Chief Executive Michael Strauss said in a statement issued late Thursday. “Unfortunately, the market conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that we have no realistic alternative.”
This confirms a lot of past speculation that the sub prime meltdown would spill over into the Alt A market. Guidelines are going to tighten up in this segment and have already. Corrections are going to take place and we are all going to have to refasten our seat belts for another wild ride.
I am not a product or guidelines guy so with that in mind I would like to here your feed back and speculations of what you think the next month will comprise of. Will other companies falter? How will this effect the housing market in general and markets with rising inventories?
Let’s here it…what do you think.
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It is in our opinion that there will be a contraction with the pass thru companies like American Home Mortgages (they are a conduit and sell all loans to Countrywide Taylor Bean and Wells Fargo). A Wells rep said that AHM shared greatly in the profits but slightly in the risks.
If you look at these subprime mortgage problems, those thoughts are echoed by their sponsors as well.
They all offer the loan make the money and pass the risks to the Countrywide’s Taylor Bean’s and Wells Fargo’s and Bear Stearns of the finance world.
Tough deal for all of us, more so for the employees of AHM. Has anyone heard from Paul?
I am sorry to hear about so many people losing their jobs like that. Although, I have always said that getting rid of loan officers is a sign of growth. I am reminded of my wife’s statement that she wanted her hair to grow longer so she she had to trim off the dead ends. It works like that in more places than just hair. It sucks that the market has been like this lately, but let us remember it is not as bad as we are expected to believe it is. Even in nature there is a crunch before growth. I am looking forward to the growth.
I’m still reeling from it all, I guess the full story won’t be untangled for a while.
For example, AHM owns a thrift (American Home Bank). I haven’t been given a clear explanation as to why the thrift could not have helped with the cash flow when the warehouse lenders balked. Regardless, the whole mortgage banking model has now been thrown up as endangered. BlownMortgage.com just posted a nice piece about risks of being an (overly) aggressive mortgage banker.