If we’ve learned anything from our formative years, it’s that if you blow a piece of Bubble Yum too big, it’ll burst in your face and leave a stick mess after it breaks.
The recent burst of the “easy lending bubble” is making buying the American Dream sticky. On Monday, New York-based American Home Mortgage Company filed for bankruptcy protection. Once the country’s 10th largest lender, the company is the latest to feel the backlash of investors throwing away their over chewed gum.
According to the Associated Press, the company said it fell victim to “extraordinary disruptions” in the markets that support the mortgage industry. A weak housing market and a spike in payment defaults scared investors away from mortgage debt, including bonds and other securities backed by home loans.
But what does this mean for the regular Joe? It’ll mean less jobs in the New York area since American Home’s staff went from 7,400 to 1,000 in less time than it takes to answer a Jeopardy question—that’s and one less company to beg for a mortgage from.
Photo courtesy of Lin Pernille.