Profile: American Home Mortgage Investment Corp (AHMIQ.PK)
American Home Mortgage Investment Corp. (AHM Investment) is a mortgage real estate investment trust (REIT) engaged in the business of investing in mortgage-backed securities and mortgage loans resulting from the securitization of residential mortgage loans originated and serviced by its subsidiaries. The Company also invests in securitized mortgage loans originated by others. Most of its portfolio consists of securitized adjustable-rate mortgage (ARM) loans, which are of prime and alternate A quality. AHM Investment primarily conducts its business in four principal segments: mortgage holdings, loan origination, loan servicing and banking. The mortgage holdings segment uses the Company’s equity capital and borrowed funds to invest in mortgage-backed securities and mortgage loans held for investment. The loan origination segment originates mortgage loans through the Company’s retail and wholesale loan production offices and its correspondent channel, as well as its direct-to-consumer channel supported by its call center. The loan servicing segment includes investments in mortgage servicing rights (MSRs), as well as servicing operations primarily for other financial institutions. The banking segment includes loans held for investment and deposits acquired in the Company’s acquisition of Flower Bank, fsb. In August 2007, the Company, together with certain of its subsidiaries, had filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court.
The Company acquired Flower Bank, fsb, of Chicago, Illinois, in October 2006. Flower Bank, fsb is a federally chartered savings bank. In February 2007, Flower Bank, fsb changed its name to American Home Bank. The Company’s mortgages are originated through a network of loan origination offices and mortgage brokers or are purchased from correspondents, and are serviced at the Company’s Irving, Texas servicing center. The Company conducts most of its investment activities, including loan origination for its own portfolio, directly or through its qualified REIT subsidiaries (QRSs). It conducts its businesses of originating loans for sale and servicing mortgages, as well as ancillary businesses, such as mortgage reinsurance, through its taxable REIT subsidiaries (TRSs). In addition, the Company’s TRSs operate its retail and mortgage broker acceptance branches, where it accepts mortgage applications from customers. American Home Mortgage Holdings, Inc. (AHM Holdings), a direct wholly owned subsidiary of AHM Investment, serves as the parent holding company for American Home Mortgage Corp. (AHM Corp.). American Home Mortgage Acceptance, Inc. (AHM Acceptance) is also a wholly owned subsidiary of AHM Investment. AHM Corp., together with AHM Acceptance and American Home Mortgage Servicing, Inc. (AHM Servicing), services the Company’s loans, as well as certain loans for third parties.
Mortgage Holdings Segment
The Company issues collateralized debt obligations (CDOs) with payment requirements that wholly or partially mirror the receipts from the Company’s loans. It also uses interest rate swaps to extend repurchase and other short-term borrowings. It invests in ARM and hybrid-ARM securitized loans. AHM Investment’s portfolio of mortgage loans and mortgage-backed securities are self-originated. The size of the Company’s leveraged portfolio of mortgage loans held for investment and mortgage-backed securities was approximately $15.6 billion as of December 31, 2006. Its mortgage-backed securities are funded through borrowings in the reverse repurchase market. Its loans held for investment are funded through reverse repurchase agreements and CDOs. The Company’s termed repurchase agreements generally have maturities ranging from 1 to 12 months.
Loan Origination Segment
The Company’s loan origination business originates the securitized loans, in which it invests, as well as additional loans that it sells, typically at a gain. During the year ended December 31, 2006, AHM Investment made loans to approximately 196,000 borrowers and its total originations were approximately $58.9 billion. The Company’s originations are sourced through its own sales force, as well as through mortgage brokers and loan correspondents. As of December 31, 2006, the Company conducted its lending through over 550 retail and wholesale loan production offices located in 47 states and the District of Columbia. During 2006, the Company’s origination business obtained approximately 55% of its originations from mortgage brokers through its wholesale loan production offices, and 35% of its originations through its retail loan production offices and Internet call center, while 10% of its originations were purchased from correspondents.
AHM Investment offers an array of mortgage products. In 2006, all of the loans made by the Company were secured by one- to four-family dwellings. Its mortgage product line includes ARM loans, conventional conforming fixed-rate loans, alternate A loans, jumbo fixed-rate loans, home equity or second mortgage loans, government fixed-rate loans, non-prime loans and construction loans. The ARM loan’s defining feature is a variable interest rate that fluctuates over the life of the loan, usually 30 years. The Company also offers ARM loans with a fixed period of three years, five years or 10 years. The conventional conforming fixed-rate loans conform to the underwriting standards established by Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac). The Company offers Alternate A first lien mortgage loans, which consist primarily of first-lien mortgage loans made to borrowers whose credit is generally within typical Fannie Mae or Freddie Mac guidelines, but have loan characteristics that make them non-conforming under these guidelines. It offers jumbo loans with financing features, such as the pledging of security portfolios.
The Company offers home equity or second mortgage loans, which are generally secured by second liens on the related property. It offers government fixed-rate loans, which are mortgage loans that conform to the underwriting standards established by the Federal Housing Authority (FHA) or the Veterans Administration (V). The Company has been designated by the United States Department of Housing and Urban Development (HUD) as a direct endorser of loans insured by the FHA and as an automatic endorser of loans partially guaranteed by the VA, allowing it to offer FHA or VA mortgages to qualified borrowers. AHM Investment offers a variety of construction loans for owner-occupied, single-family residences. These loans are available on a rollover basis, meaning that the borrower can secure funding for the land purchase and construction of the home, then roll the financing over into a permanent mortgage loan. It also offers non-prime mortgage loans. With respect to mortgage loans that the Company originates but does not securitize, it typically seeks to sell those loans within 45 days of origination. The Company sells those loans to Fannie Mae, Freddie Mac, national banks, thrifts and smaller banks, securities dealers, REITs and other institutional loan buyers.
Loan Servicing Segment
AHM Investment’s servicing business is conducted through AHM Servicing. Loans are serviced primarily for the trusts of the Company’s securitizations and for Fannie Mae, Government National Mortgage Association (Ginnie Mae) and other third-party purchasers of its loans. Its servicing business collects mortgage payments, administers tax and insurance escrows, responds to borrower inquiries, and enables the Company to maintain control over its collection and default mitigation processes. As of December 31, 2006, AHM Servicing serviced approximately 197,000 loans with an aggregate principal amount of approximately $46.3 billion.
The Company’s banking business is conducted through American Home Bank, which the Company acquired in October 2006. AH Bank will hold mortgages, consumer loans and securities as its primary assets, and fund its holdings through deposits, including escrow balances.
American Home Mortgage Investment Corp
538 Broadhollow Road
MELVILLE NY 11747