Subprime Mortgage Crisis and Bankruptcy
As with many subprime mortgage lenders, AFM experienced financial difficulties in 2006 due to repurchase demands from investors and diminished funding capacity because of an increase in non-performing loans. In August 2006, AFM held an auction at its corporate headquarters to sell its assets.
In February 2007, HSBC Mortgage Services, Inc. commenced litigation against AFM in the Northern District of Illinois based on assigned loans that resulted in early payment defaults, a repurchase event pursuant to the governing loan purchase agreement. Court documents indicate Countrywide Financial Corporation was also demanding repurchase of some loans it purchased from AFM. In March 2007, the Wall Street Journal reported many lenders, including HSBC Mortgage Services and Countrywide, were demanding AFM repurchase loans pursuant to repurchase provisions contained in loan purchase agreements.
AFM's financial difficulties were exacerbated by advertising commitments that exceeded the company's ability to meet. David Hal Burch, Tamara Burch's husband, was the director of marketing for AFM and responsible for AFM's advertising campaigns.
After resigning as COO, Myers incorporated Skystone Mortgage Group, Inc. on May 23, 2006, according to the Georgia Secretary of State, but announced in March 2007 that it was no longer accepting loan applications due to lack of funding capacity. On August 6, 2007, Skystone and Myers both filed voluntary "no asset" Chapter 7 bankruptcy petitions, as did AFM and Burch. As of April 2010, both Burch and Myers are employees of Amerisave Mortgage Corporation in Atlanta, Georgia.
Read more about this topic: American Freedom Mortgage
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