AHM deflects blame on bounced checks

American Home Mortgage Investment Corp. bounced 564 property tax checks in Maryland but blamed other financial institutions for the problem, the state's commissioner of financial regulation said Thursday.

The bankrupt mortgage lender responded Thursday to inquiries made last week by state regulators, saying the problems stemmed from the inadvertent freezing of bank accounts and a previously disclosed dispute with government-sponsored mortgage financier Freddie Mac.

While no one has lost their house yet in this situation, missed tax payments can lead to a tax lien and ultimately foreclosure on a property.

American Home Mortgage claimed all but six of the bad checks were eventually made good, Sarah Bloom Raskin, Maryland's commissioner of financial regulation, told The Associated Press.

But by Bloom Raskin's initial count, 36 were still unpaid. The state regulator plans to follow up with another inquiry to American Home Mortgage asking for more details on the discrepancy.

American Home Mortgage did not immediately return calls seeking comment.

According to Bloom Raskin, American Home Mortgage blamed the bad checks on JPMorgan Chase & Co. and the Freddie Mac dispute.

American Home Mortgage claimed JPMorgan Chase inadvertently froze escrow accounts that were supposed to be used to make the property tax payments, Bloom Raskin said. American Home said JPMorgan Chase thought it had an interest in the accounts, but unfroze the accounts when it realized it did not, according to Bloom Raskin.

A spokesman from JPMorgan Chase said the company was looking into the matter.

The dispute with Freddie Mac was settled last week when American Home Mortgage released servicing information to a third party to handle the payments on loans owned by Freddie.

In August, Freddie Mac tried to pull servicing contracts from American Home Mortgage _ shortly before AHM filed for bankruptcy protection _ and transfer them elsewhere. While lenders were able to seize their funds, American Home Mortgage refused to relay vital account information that would have allowed Freddie Mac to pay property taxes on the accounts.

Mortgage servicers typically collect property tax payments each month with a borrower's mortgage payment. The property taxes are then placed in an escrow account and held until property tax bills are due. Because they are placed in an escrow account, funds should always be available to make the payments. The accounts should also be protected from creditors in bankruptcy.

American Home Mortgage filed for bankruptcy protection in August amid the tightening credit market and demands for more collateral from its lenders.

Despite closing down its lending business, it continues to operate its servicing unit. American Home Mortgage was the 27th largest servicer in the country as of June 30, with $43.49 billion in volume, according to Inside Mortgage Finance.