Mortgage lender HomeBanc files for Chapter 11

ATLANTA -- Regional mortgage lender HomeBanc has filed for bankruptcy protection, the latest casualty of a housing market that continues to weaken.

The company filed a Chapter 11 petition dated Thursday in U.S. Bankruptcy Court in Delaware.

In the filing, the company checked off a box listing estimated assets and liabilities of more than $100 million each.

A list of creditors holding the largest unsecured claims against HomeBanc included JP Morgan Chase Bank, KeyBank, Commerzbank, US Bank and French bank BNP Paribas, which earlier this week froze three investment funds heavily invested in securities backed by subprime mortgages.

The company said in a statement Friday that its board authorized the bankruptcy filing to "preserve the value of the company's remaining assets."

HomeBanc believes that, under the protection of Chapter 11, it will have the time and opportunity that it needs to achieve the best possible value for the creditors and other constituencies of its assets and operations, and to achieve an orderly wind down of the company.

HomeBanc is the latest of dozens of mortgage lenders to go out of business or file for bankruptcy in recent months.

Growing delinquencies and defaults on subprime mortgages — loans given to customers with poor credit history — have increased rapidly in recent months, making investors skittish about buying the loans in the secondary markets.

Without investors to purchase the loans, mortgage lenders often have no other alternatives to tap funds to make mortgages and have to shut down because they have no liquidity. Just last week, American Home Mortgage Investment filed bankruptcy in the same court for similar reasons.

In announcing the sale of the branches to Countrywide, HomeBanc said it was exiting the retail mortgage lending business in an attempt to maintain the value of its mortgage portfolio and servicing operations.