The lender successfully applied for debtor-in-possession (DIP) financing to pay salaries and other costs as it shut most businesses, as well as funding to keep its loan servicing unit temporarily in operation.
AHMC initially got interim approval to tap DIP financing provided by WL Ross & Co. The company committed to provide up to $50 million in financing to cover general business expenses during bankruptcy proceedings.
The lender also received interim court approval for the use of cash collateral that would help maintain its loan servicing business while it is put up for sale. It initially closed its operations on 3 August and expected its employee base to be reduced to 750 workers, down from the 7,409 it reported at the end of last year.
During the three months to 31 March 2007, AHMC’s assets totalled $20.5 billion (£10.1 billion), just covering its $19.3 billion liabilities.
The company became the latest casualty of the problems in the U.S. mortgage market, which has been hit by rising customer defaults and tightening credit markets.
Chris Cummings, director-general of the Association of Mortgage Intermediaries, said: “None of the conditions in US non-conforming exist in the UK market so we are not going to see the same kind of credit crunch. Nevertheless it is likely that non-conforming lending here will be affected by the US problems.”
“However, the mortgage market is not following the same pattern. Unless the UK is heading into a recession, which is not what we expect, we are confident that we are not going to return to the pain of the 90s.”
