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| Version 3 | Version 4 |
|---|---|
| US lender on brink of bankruptcy | US lender on brink of bankruptcy |
| (4 days later) | |
| US lender American Home Mortgage has filed for bankruptcy, after laying off the majority of its staff last week. | US lender American Home Mortgage has filed for bankruptcy, after laying off the majority of its staff last week. |
| The demise of one of the country's largest independent home loan providers is the latest case of a business suffering from the US housing slump. | The demise of one of the country's largest independent home loan providers is the latest case of a business suffering from the US housing slump. |
| Despite these worries, Wall Street rallied on Monday with leading share indices closing up sharply. | Despite these worries, Wall Street rallied on Monday with leading share indices closing up sharply. |
| The benchmark Dow Jones industrial average closed up 286.87 points, or 2.1%, at 13,468.78. | The benchmark Dow Jones industrial average closed up 286.87 points, or 2.1%, at 13,468.78. |
| Market volatility | Market volatility |
| The strong gains reflected continued volatility on the markets, the Dow Jones having fallen by a similar amount on Friday. | The strong gains reflected continued volatility on the markets, the Dow Jones having fallen by a similar amount on Friday. |
| American Home Mortgage's woes are the latest to afflict the mortgage investment market. | |
| Earlier this year the firm had over seven thousand employees, but by Friday only 750 staff remained. | Earlier this year the firm had over seven thousand employees, but by Friday only 750 staff remained. |
| Repeated interest rate rises have pushed up loan repayments, leading to a rise in defaults and hitting mortgage lenders hard. | Repeated interest rate rises have pushed up loan repayments, leading to a rise in defaults and hitting mortgage lenders hard. |
| While the sub-prime market - the sector that caters for the riskiest borrowers - has been the most obvious to suffer from defaults, it is not alone. | While the sub-prime market - the sector that caters for the riskiest borrowers - has been the most obvious to suffer from defaults, it is not alone. |
| American Home Mortgage offered loans that were categorised between prime and sub-prime. | American Home Mortgage offered loans that were categorised between prime and sub-prime. |
| It also provided the less common mortgage with adjustable interest rates. Most US mortgages have fixed rates. | It also provided the less common mortgage with adjustable interest rates. Most US mortgages have fixed rates. |
| As the firm files Chapter 11 proceedings - the US process to seek bankruptcy protection - Deutsche Bank, Wilmington Trust and JP Morgan Chase are American Home Mortgage's three largest creditors. | As the firm files Chapter 11 proceedings - the US process to seek bankruptcy protection - Deutsche Bank, Wilmington Trust and JP Morgan Chase are American Home Mortgage's three largest creditors. |