More Bad Mortage News

American Home:

Aug. 6 (Bloomberg) -- American Home Mortgage Investment Corp. filed for bankruptcy protection, becoming the second- biggest residential lender in the U.S. to close down this year.

The filing adds to signs that late payments have spread to homeowners with good credit records. American Home sought federal court protection today in Wilmington, Delaware, with assets of more than $20.6 billion and debt of more than $19.3 billion. The company said Aug. 2 it would halt operations and slash its staff.

American Home specialized in mortgages for people who fall just short of top credit scores. More than half a dozen competitors have declared bankruptcy this year as defaults spilled over from ``subprime'' borrowers with the worst repayment records to those with more reliable payment histories.

``Their sources of funding have all dried up,'' said Mark Power, a lawyer advising some of the more than 100,000 creditors. ``This case is going to be very similar to New Century.''