AHM goes Tango Uniform; Cross-Defaults Imminent?
Chuck Ponzi August 2nd, 2007
As the big story for the day, American Home Mortgage went down in a blaze of glory that would have impressed even NEW Century former employees.
It truly was a spectacle.
It appears that RAIT may be a subordinate victim of just that happening.
I have long discussed the likelihood of the overall credit event gaining steam through cross-defaults. Basically, when the default of one company causes one or more companies to also default, the effect is amplified through the market, credit or otherwise. It has a snowball effect to the overall market. The largest market crashes occur due to leveraged shareholders needing to sell into weakness, depressing share values further.
Take a look at the charts side-by side. Having any money in either one of them made this last week very painful.
On top of all of that (as if it weren’t enough)
It appears that Accredited Home Lenders (LEND) is finally giving up the ghost. All attempts at saving the company are being used, but even the proposed sale to Lone Star is likely to evaporate.
In its delayed 2006 annual report filed Thursday with the U.S. Securities and Exchange Commission, San Diego-based Accredited said it could not guarantee it would remain a “going concern” as market conditions worsen for subprime lenders.
and
Late Thursday, Accredited said it is “proceeding as planned to work toward closing the merger,” but that there was “no guarantee that the transaction will close.” It said it is still planning to complete the merger by the end of September.
Ed Trissel, a Lone Star spokesman, declined to comment.
That’s code for No Way Jose.
