American Home Mortgage, one of the biggest mortgage companies in the US, has said it will cease business today as it becomes one of the latest casualties of a widespread housing downturn.
In a statement late last night, American Home Mortgage said it had stopped taking new home loan applications and had notified its employees they would be laid off today.
'The company employee base will be reduced from over 7,000 to approximately 750,' the mortgage lender said.
CEO Michael Strauss said market conditions had deteriorated to the point where the company had 'no realistic alternative'.
Strauss founded the mortgage lender in 1988. It rapidly grew into one of America's largest home lenders and originated $59 billion in loans last year, up from $45 billion in 2005.
The New York state-based firm had revealed on Tuesday that it was unable to fund lending obligations of $300m and was also unable to borrow fresh capital to shore up its business.
The US housing market has been in a slump for over a year following a years-long boom and foreclosures have risen rapidly in the past six months, particularly on mortgages granted to Americans with patchy credit histories.
