|Trade||Subprime Mortgage Lending and Alt-A Mortgage Lending|
|Based||Marietta, Georgia, 2001|
|Defunct||January 30, 2007|
|Headquarters||Atlanta, Georgia (unique headquarters)
Marietta, Georgia (2nd headquarters)
|Tamara L. Burch, co-founder, President and CEO
DeeAnn R. Myers, co-founder, Vice-President and COO
American Freedom Mortgage, Inc. (AFM) was a non-public S Company integrated on February 2, 2001, in keeping with the Georgia Secretary of State, and headquartered in Marietta, Georgia. AFM carried out enterprise as a multi-state direct-to-consumer correspondent lender and mortgage dealer specializing within the origination of subprime and Alt-A mortgage loans. AFM additionally operated a wholesale mortgage lending division that originated loans by way of accredited mortgage brokers and which used the fictional title AFMI Funding. As a correspondent lender, AFM bought the mortgage loans on the open market to bigger buyers.
In accordance with an article in The Wall Avenue Journal, AFM originated loans for a price, then bought them to buyers similar to HSBC Mortgage Providers, Inc. and mortgage-finance firm Countrywide Monetary Company.
The CEO of AFM was Tamara Burch and the COO was DeeAnn Myers. Previous to co-founding AFM, each Burch and Myers had been mortgage originators with St. Louis, Missouri-based American Fairness Mortgage, Inc., a number one subprime mortgage lender.
On January 30, 2007, AFM and Burch each filed voluntary “no asset” Chapter 7 chapter petitions in america Chapter Court docket for the Northern District of Georgia. Each the AFM and Burch chapter instances had been subsequently transformed to “asset” instances by the Chapter Trustee after belongings for distribution to unsecured collectors had been found. The AFM chapter case was assigned Case No. 07-61304-jem.
Subprime and Alt-A mortgage lending actions
Originally of 2006, AFM was a number one subprime and Alt-A mortgage correspondent lender and mortgage dealer in america. Subprime mortgage loans are riskier loans in that they’re made to debtors unable to qualify below conventional, extra stringent standards on account of a restricted or blemished credit score historical past. Subprime debtors are usually outlined as people with restricted earnings or having FICO credit score scores beneath 620 on a scale that ranges from 300 to 850. Subprime mortgage loans have a a lot larger price of default than prime mortgage loans and are priced elegant on the chance assumed by the lender. Alt-A loans are usually prime (i.e., FICO credit score scores of 680 or larger) or near-prime (i.e., FICO credit score scores from 620 – 679) loans with some type of diminished documentation necessities (e.g., “acknowledged earnings”, “acknowledged belongings”, “no earnings verification”).
Though most dwelling loans don’t fall into this class, subprime mortgages proliferated within the early 2000s. Subprime mortgages totaled US$600 billion in 2006, accounting for about one-fifth of the U.S. dwelling mortgage market.
Subprime mortgage disaster and chapter
As with many subprime mortgage lenders, AFM skilled monetary difficulties in 2006 on account of repurchase calls for from buyers and diminished funding capability due to a rise in non-performing loans. In August 2006, AFM held an public sale at its company headquarters to promote its belongings.
In February 2007, HSBC Mortgage Providers, Inc. commenced litigation towards AFM within the Northern District of Illinois elegant on assigned loans that resulted in early fee defaults, a repurchase occasion pursuant to the governing mortgage buy settlement. Court docket paperwork point out Countrywide Monetary Company was additionally demanding repurchase of some loans it bought from AFM. In March 2007, The Wall Avenue Journal reported many lenders, together with HSBC Mortgage Providers and Countrywide, had been demanding AFM repurchase loans pursuant to repurchase provisions contained in mortgage buy agreements.
AFM’s monetary difficulties had been exacerbated by promoting commitments that exceeded the corporate’s potential to satisfy. David Hal Burch, Tamara Burch’s husband, was the director of promoting for AFM and chargeable for AFM’s promoting campaigns.