AHMIQ -- Emerging from Bankruptcy?
Ross to Buy AHM Mortgage Unit For At Least $435 million
Bloomberg reports on Sept. 21: Wilbur L. Ross Jr., who became a billionaire by investing in bankrupt steel companies, offered to pay at least $435 million for a unit of American Home Mortgage Investment Corp. and said he plans to ``get into all aspects of the mortgage industry.''
Ross formed AH Mortgage Acquisition Co. to buy bankrupt American Home's servicing unit that collects payments and maintains escrow accounts for about $57 billion in home loans. To complete the purchase, he must win a court-sanctioned auction for the unit next month.
Ross, 69, compared the state of the mortgage industry to the opportunities he saw in steel and auto parts five years ago. Starting in 2002, Ross bought four bankrupt steel companies and merged them to create North America's second-largest steel producer. He sold the company, International Steel Group Inc., to Indian billionaire Lakshimi Mittal for $4.7 billion three years later. Ross also has invested in coal and textiles.
Ross said he intends to use servicing as a base from which to expand and would get into home lending after ``a while.'' He said he anticipates making other acquisitions.
Ross said he expects to buy the right to service at least $38 billion worth of the loans. If that figure climbs to $41 billion, he will pay $462 million for the company, he said.
Under the proposed sales agreement, Ross's AH Mortgage will be the lead, or so-called stalking horse, bidder in an auction scheduled for Oct. 5. If another company wins the bidding for the unit, AH Mortgage would collect a $5 million breakup fee and as much as $2 million for expenses.
Related Story:
American Home, Freddie Mac resolve dispute
Reuters reports: American Home Mortgage Investment Corp (AHMIQ) and Freddie Mac (FRE) have resolved a dispute that the latter said could have cost thousands of people their homes.
Freddie Mac, the U.S. government-sponsored mortgage finance company, had sought court permission to take over the servicing of about 4,547 home loans valued at about $796.8 million.
In court papers filed late Tuesday, American Home said it would turn over loan files to Bank of America Corp (BAC.N: Quote, Profile, Research), which agreed to service the loans on an interim basis.
American Home, based in Melville, New York, said it would provide Freddie Mac a detailed list of insurance and tax payments as they come due. It said Freddie Mac would then release from escrow the amounts needed to make such payments.
Freddie Mac had accused American Home of failing to pay insurance and property taxes on loans it serviced. It said this created an "imminent risk" that borrowers' insurance could lapse, tax bills could go unpaid, and homes could go into foreclosure.
Freddie Mac spokesman Brad German said the McLean, Virginia-based company had wired $2.4 million on Tuesday night to cover all outstanding insurance and tax payments.
"We agreed to a consensual resolution so that the borrowers' accounts can be brought up to date," he said.
Mortgage servicers collect payments and ensure that insurance and taxes are paid. Bank of America is the administrative agent for the loans, court papers show.
The agreement requires court approval. U.S. Bankruptcy Judge Christopher Sontchi, who sits in Wilmington, Delaware, is scheduled to hold a hearing Thursday afternoon.
American Home said the settlement terms are reasonable, are in the best interest of creditors, and "clear an obstacle to the sale of the servicing of the Freddie Mac loans."
The company is liquidating operations to help pay creditors and plans to auction its servicing business.
American Home had been the 10th-largest U.S. mortgage lender before filing for Chapter 11 bankruptcy protection on August 6.
The filing came after American Home's own lenders cut off its supply of cash, forcing it to stop lending.
Bank of America did not immediately return calls seeking comment.
Full Story: reuters.com
pcyhuang
|
