Mortgage Firm Fails, to Employees' Disbelief

MELVILLE, N.Y., Aug. 3 -- Some companies fade away over time. American Home Mortgage Investment is disappearing quickly, right in front of its 7,000 employees' eyes. The latest victim of the subprime mortgage collapse has run out of money, and now its workers have run out of time.

"I thought it was like a dream," Saikumar Bullachi said as he left the company's Long Island headquarters Friday morning for the last time. "Suddenly, you know, somebody wakes you up and says it's all over now."

American Home Mortgage, which has been struggling to raise money to make new loans, announced this week that its financial backers had essentially pulled the plug and that it had let go all but 750 of its employees. The unemployed include the 1,400 workers at its Long Island headquarters.

Wall Street banks will not lend American Home Mortgage any more money for home loans, and some have demanded that money already lent be returned.

Many employees said it was inappropriate to comment on the layoffs. Those who agreed to speak were generally optimistic about their futures.

"It's a very emotional thing," Bullachi said. "People who spent a lot of time here, they are pretty emotional about being separated. But then everybody is positive they'll get opportunities."

Kaneen Morgan, who worked on producing the company's Web site, said some workers wept after hearing of the impending shutdown.

"I didn't expect this at all, but these kinds of things happen, especially in this type of field," she said. "It hurts, but I believe in God, and things are going to get better. I believe something better is out there."

Chief executive Michael Strauss said in a statement that "market conditions in both the secondary mortgage market as well as the national real estate market have deteriorated to the point that we have no realistic alternative."

American Home Mortgage's lenders balked because the value of the mortgage loans that are collateral for the company's credit lines have dropped. The market for mortgage loans has suffered "unprecedented disruption" this year, the company said, adding that it was having trouble selling its mortgages.

"We were in risk management so we kind of saw everything coming," said Jonathan Blumberg, an analyst. "It's tough to say" what the industry's immediate future holds, he said.

Christine Cruz, who had been a business analyst for the company since last year, was cautiously optimistic about her future.

"It's going to be tough. The market is tough out there," she said. "There's going to be a lot of people looking for the same positions. You know a lot of people have been here for a really long time. It's kind of like family here; it was a really good company to work for."

It also appeared that some employees might not be out of work long. As they carried file folders and other items to their cars, they were greeted by fliers on their windshields advertising job openings, including one with a local law firm.

On another side of the parking lot, a man who identified himself as Manny Mosquera of Union America Mortgage in Mineola hopped out of a stretch limousine to say that his company had openings for some of the American Home alumni.

"The bottom line is people still have to buy homes, people still have to refinance their house," he said. "That's not changing, that's never going to change.

"We're trying to help some people out, find them some employment, simple as that."