American Home Mortgage (AHM) plunged 30% after the mortgage real estate investment trust delayed paying its quarterly dividends, citing margin calls and writedowns.
The Melville, N.Y., lender said it delayed the payments "in order to preserve liquidity until it obtains a better understanding of the impact that current market conditions in the mortgage industry and the broader credit market will have on the company's balance sheet and overall liquidity. The disruption in the credit markets in the past few weeks has been unprecedented in the company's experience and has caused major write-downs of its loan and security portfolios and consequently has caused significant margin calls with respect to its credit facilities."
The company said Friday night that it had delayed payment of its 70-cent common dividend, which was to be paid Friday, and on its series A and B preferred shares, which were to be paid Tuesday.
The news comes as the collapse of the subprime mortgage market has hit lenders throughout the U.S. Earlier this month,
said two hedge funds that had made bets on subprime-related securities were worthless.
American Home dropped $3.14 to $7.33.