American Home mortgage holders ask court to appoint official borrowers' committee

By Caroline Salls

Pittsburgh, Sept. 9 - A group of American Home Mortgage Investment Corp.'s mortgage contract holders asked the U.S. Bankruptcy Court for the District of Delaware to appoint an official committee of borrowers for the company's Chapter 11 case, according to a Tuesday court filing.

According to the motion, American Home's bankruptcy case has been "dominated by warehouse lenders, mortgage securitizers and other financial institutions that, on several issues, have direct conflicts with the borrowers."

The borrowers also said the company's official committee of unsecured creditors has not worked to protect the borrowers' interests.

In addition, the borrowers said they were excluded from plan of liquidation negotiations, and the company has proposed a plan that minimizes or eliminates their claims and makes it "much more difficult for them to protect themselves or their families in the event of foreclosure proceedings."

"As the debtors' proposed plan of liquidation and accompanying disclosure statement make plain, American Home and the dominant creditors in these cases regard the borrowers as sources of income for the debtors' estates, not as an important creditor constituency with rights to be protected and damages claims to be paid," the borrowers said in the motion.

The borrowers also said many mortgage holders have not filed claims in American Home's bankruptcy case because the company did not provide them with notice of the case or claims bar date.

American Home, a Melville, N.Y.-based real estate investment trust focused on residential mortgage loans, filed for bankruptcy on Aug. 6, 2007. Its Chapter 11 case number is 07-11047.

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