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Thursday August 23, 12:04 AMQuality Home files Ch. 11, Amstar shuts mtg unitNEW YORK, Aug 22 (Reuters) - Quality Home Loans, a subprime mortgage lender, has filed for Chapter 11 bankruptcy, joining at least a dozen other home loan providers to seek court protection this year as the U.S. housing market slumped.Meanwhile, Amstar Financial Holdings Inc said it will shut down its Amstar Mortgage Corp. unit around Dec. 15, citing difficult market conditions, and turn over control of its 118-branch network to The Money Store of Florham Park, New Jersey. It plans to honor loan commitments through that date. Dozens of mortgage lenders have quit the industry this year as delinquencies and foreclosures soared, housing prices stopped rising, and tighter capital markets left them short of cash needed to operate. Agoura Hills, California-based Quality Home Loans and three affiliates filed for protection from creditors on Tuesday with the U.S. Bankruptcy Court for the Central District of California, court records show. The company listed between $1,000,001 and $100 million of assets, more than $100 million of liabilities, and between 1,000 and 5,000 creditors. Subprime lenders make home loans to people with weaker credit histories. Quality Home Loans catered to customers including those with no minimum credit scores, no mortgage or credit histories, no documentation of income or assets, and in or just out of bankruptcy, according to its Web site. Houston-based Amstar said on Wednesday its decision to quit mortgage lending resulted mainly from market conditions, the cost to operate branches and defend lawsuits, and "seemingly stable lenders unable or unwilling to honor contract commitments." As part of the shutdown, Amstar said it plans to cease public reporting of its financial statements. Spokesman Michael Wayland said Amstar made about $1.5 billion of mortgage loans in the year ended Sept. 30, 2006, with about two-thirds eligible for purchase and guarantee by mortgage companies Fannie Mae and Freddie Mac . He said Amstar employs 300 to 400 people, down from 800 in February. Amstar said its branches are in 31 U.S. states and Washington, D.C. A Money Store spokesman did not immediately return a call seeking comment. (Additional reporting by Shikhar Balwani and Tenzin Pema in Bangalore) |
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