Wednesday, August 1, 2007

Another home mortgage company crashes

This time, it’s American Home Mortgage Investment Corp., which says it’s out of cash and could have to liquidate. The news sent yesterday’s Dow down almost 150 points. And, here’s why its problems are so newsworthy:

Because American Home does not specialise in sub-prime, its knock-on involvement set off alarm bells. Sam Rahman, at Baring Asset Management, said: “That’s the big news that's hitting the markets today. It is raising concerns about the whole mortgage market.”

It certainly raises alarm bells with me, for the same reason. Until this week, American Home wasn’t even on the radar screen of home mortgage problems.

Cross-posted at Socratic Gadfly.