Lenders 'bombard' American Home Mortgage

Newsday reports:

The bankruptcy proceedings for Melville-based American Home Mortgage have been complicated by lenders "bombarding" the company with demands that it hand over loans it's servicing, an attorney for the company said Monday.

Addressing U.S. Bankruptcy Judge Christopher Sontchi in his Wilmington, Del., courtroom, John Dorsey, of the firm Young, Conaway, Stargatt and Taylor, said the company had not planned on "running in here every day" to fight lenders' claims to its loan servicing assets.

Since its Aug. 6 filing for bankruptcy protection, American Home has fended off actions from banks including Credit Suisse First Boston, Morgan Stanley, Impac Funding Corp., AMB Amro and Deutsche Bank -- all claiming that hundreds of millions of dollars in loans being serviced by American Home should be transferred to them.

The banks have claimed that they terminated their servicing agreements with American Home prior to its bankruptcy, and that bankruptcy protection should kick in after they have reclaimed their loans. If the court agrees, American Home will receive much less money for its servicing subsidiary, one of its most valuable assets.

An interesting story to watch.