Bankrupt American Home to sell $1.62 bln mortgages

NEW YORK (Reuters) - Bankrupt home loan provider American Home Mortgage Investment Corp (AHMIQ.PK) said on Wednesday a federal bankruptcy judge has authorized the auction by two affiliates of 5,700 mortgage loans with an unpaid principal balance of about $1.62 billion.

The company said Broadhollow Funding LLC and Melville Funding LLC would auction the loans on the morning of September 11 at a Wilmington, Delaware law office. Bidders wishing to participate must notify the U.S. bankruptcy court in Wilmington by the previous day, it said.

Melville, New York-based American Home was the 10th-largest U.S. mortgage lender before filing on August 6 for Chapter 11 bankruptcy protection after it stopped making loans and lenders cut off its supply of cash. It is liquidating its operations to help pay creditors. Broadhollow Funding and Melville Funding are not subject to the Chapter 11 filing, American Home said.

(Reporting by Jonathan Stempel)