Credit Concerns In The Mortgage Market Take Down AHM
The liquidity problems eminating from the mortgage market appear to have taken another victim today.American Home Mortgage (AHM) said that the liquidity crunch it is experiencing has made it so that it can no longer fund home loans, and it may have to liquidate assets. That is basically like saying that they don't know how much longer they can stay in business.
Take a look at that chart above. The stock was halted on Friday, and when it opened today, it was soon trading below $1. That's right, $1. The stock was above $20 a month ago.
This is an example of the extreme stupidity that these lenders went to in order to fund any and every loan they could during the real estate boom. But no party ends without a hangover. Unfortunately, the debacle is weighing on the entire financial sector, which in turn is dragging the whole market lower.
The financial crisis that is hitting the mortgage market has to be first and foremost on the Fed's radar. I'm not sure how long they can sit by and watch companies go under without throwing the industry a lifeline in the form of a rate cut.
And it doesn't help that oil prices are making new highs today. Are you listening, Ben?
posted by J. Kahn @ 11:56 AM
2 comments
2 Comments:
I think the low of the day was $1.03 but still your point is valid. Did you know that earlier this year, management was buying this stock for their own account? That's gotta hurt. Not only does your employer go bust, but you bought into the company all the way down. These guys should know better. It'll be interesting to see who follows,
Zach
Were any of you guys short on this one? I owned some put options, but with the gains from that I am looking for another credit crisis to play? Any ideas?
--Doug
www.tomorrowsnewspaper.blogspot.com
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