labels: economy - general, banks & institutions
US mortgage lender HomeBanc files for bankruptcynews
11 August 2007

Mumbai: Atlanta, US-based mortgage lender HomeBanc Corp has filed for Chapter 11 bankruptcy protection, two days after it agreed to sell most of its assets to Countrywide Financial Corp., and said it plans to shut down.

In a filing late on August 9 with the US bankruptcy court in Wilmington, Delaware, HomeBanc listed $5.1 billion of assets and $4.9 billion of debt.

"Recent disruptions in the mortgage loan and real estate markets have been dramatic, in terms of both magnitude and timing," chief executive Kevin Race said. These conditions put HomeBanc in an "untenable business position," he added.

HomeBanc said the bankruptcy filing would help it maximize recoveries for creditors and effect "an orderly wind-down of the company."

HomeBanc had earlier said it would exit the mortgage origination business and sell retail mortgage assets, including five branches, to Calabasas, California-based Countrywide, the largest US mortgage lender.

HomeBanc did not say how much it owes its 40 largest unsecured creditors, which it said include units of large banks such as JPMorgan Chase & Co., KeyCorp and US Bancorp.

FMR Corp., the parent of Fidelity Investments, owned 8.53 million, or about one-sixth of HomeBank's shares, it said.

Several home loan providers have gone bust while many others are struggling with rising defaults, the refusal of investors to buy loans they make, and the unwillingness of banks to extend credit.

Those seeking protection from creditors include American Home Mortgage Investment Corp., New Century Financial Corp., Alliance Bancorp Inc., Mortgage Lenders Network USA Inc., Ownit Mortgage Solutions LLC, People's Choice Financial Corp., ResMae Mortgage Corp. and SouthStar Funding LLC. HomeBanc shares were unchanged at 5 cents in afternoon trading on the Pink Sheets.

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US mortgage lender HomeBanc files for bankruptcy