People hugged outside the offices of American Home Mortgage Investment Corp. in Melville, New York, on Thursday.
American Mortgage pulls out of Hawaii
About 40 isle workers lost their jobs as the national lender closed operations yesterday
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Approximately 40 loan officers formerly employed by the insolvent American Home Mortgage Investment Corp. packed up their belongings in Hawaii yesterday morning.
The corporation closed all five offices in Hawaii -- two on Oahu, two on Maui and one on Kauai and dismissed its employees here. Nationwide, the corporation dismissed the majority of its 7,000 employees.
American Home is just the latest victim of the subprime mortgage implosion, following in the steps of other national lenders doing business in Hawaii, including New Century and Fremont Investment & Loan.
The New York-based American Home had been struggling to raise money to make new loans. Its financial backers on Wall Street, meanwhile, pulled out this week due to the sinking value of the company's credit lines.
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Employees of American Home Mortgage were packing up at their office in downtown Honolulu yesterday morning, their last day of business.
The Melville, N.Y.-based firm, a national lender, closed down operations, informing about 40 Hawaii employees that yesterday would be their last day. Nationally, most of the 7,000 employees of the mortgage corporation met with the same fate after the lender became the latest victim of the subprime mortgage implosion.
"We are closing," said Honolulu branch manager Mark James.
James declined to disclose how many American Home borrowers there were in the state of Hawaii, saying only that there were thousands and that they should continue making their scheduled payments.
However, he said the Honolulu branch only had 12 to 15 clients, in all, who were in the process of obtaining loans.
"They're all being taken care of," said James. "We're not dropping the ball on anybody. Basically, all the loans that were in process are being brokered out to other institutions or funded by IndyMac ... We're trying to keep the same terms and conditions and we're doing as much as possible to minimize disruption to our customers."
James said IndyMac Bank of Pasadena, Calif., was planning to acquire the western division of American Home Mortgage. He said employees would be transferred to IndyMac, a subsidiary of IndyMac Bancorp, which is the seventh-largest savings and loan and the second-largest independent mortgage lender in the nation.
But Katie McFadzean, spokes-woman for IndyMac Bank in Pasadena, said she could not confirm any such acquisition.
American Home Mortgage operated several offices in Hawaii -- two on Oahu, as well as two on Maui and one on Kauai.
American Home Mortgage entered the Hawaii market in 2005 when it acquired several branches from Irwin Mortgage Corp. of Columbus, Ind., including the ones in Hawaii.
Ronald Shar, president of the Hawaii Association of Mortgage Brokers, said Hawaii consumers should expect to have less access to capital than in the past due to the volatility of the lending market.
Since the beginning of the year, about 30 percent of national lenders with Hawaii branches have shut down. Other recent casualties of the subprime lending market include New Century and Fremont Investment & Loans.
"What we have going on right now is a tightening of our credit market, and it starts with the subprime market," Shar said. "Eventually, we anticipate tightening in the non-subprime markets as well."
Many of the fringe loans, he said, such as those that required no money down or income verification, will fall by the wayside.
"Consumers should lock in whatever rate programs they've been promised and hopefully, it will be honored," he said. "If you've been sitting on the fence, you'd better lock it in and get it secured before they change programs on you."