AHM Servicing Sale Facing Challenges
The saga around the sale of bankrupt American Home Mortgage's servicing rights took a new twist last week as a major stockholder in the firm filed a lawsuit challenging the company's characterization of its portfolio. Other investors and creditors have also challenged the sale, according to news reports.
Vantage Pointe Capital filed a motion in late September requesting further documentation of American Home's financial status, arguing that the price the company agreed to sell its servicing rights is too low.
American Home in early October made plans to sell its portfolio to Wilbur Ross Jr., a distressed-debt investor. American Home Mortgage has proposed selling its servicing platform and servicing rights to Mr. Ross, whose "stalking horse" bid of $500 million was deemed tops in an auction.
Located in Irving, Texas, the mortgage servicing business of American Home employs some 400 professionals and includes a portfolio of 200,000 loans with over $50 billion of unpaid principal, the company said.
While American Home has sought a quick auction of its assets, Vantage Pointe argued that the liquidation strategy amounts to dumping holdings into a "distressed market." The company's creditors and shareholders would be better off if assets were held and sold later as the market recover, according to the lawsuit.
The company has argued in court that its stockholders are unlikely to receive any of their investment in the liquidation, which is subject to bankruptcy court oversight. Hearings on the proposed sale and the objections were scheduled for mid-October. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/