A U.S. Bankruptcy Court judge yesterday allowed defunct American Home Mortgage Investment Corp. , once one of the largest subprime lenders, to destroy most of the 4,100 boxes of original loan files it still has in a parking garage in its former Melville headquarters.
But Judge Christopher Sontchi in Wilmington, Del., granted a request by Margaret Becker, a lawyer in Staten Island for the Legal Aid Society, to require the American Home trustee to set aside and cull through a few hundred of the boxes, which may contain records still relevant to possible foreclosures.
Becker said many low income homeowners were victims of deception about how much their loans actually would cost, and records from the boxes could help prove that they had been defrauded.
“These documents are critical for borrowers to demonstrate to foreclosing courts the deception and fraud that was a routine part of this mortgage industry,” Becker said.
Sean Beach, a lawyer for American Home’s liquidation trustee, said the company under an earlier court order already had destroyed or returned to loan servicers 50,000 boxes of “hard copy loan files.”
In December, AHM trustee Steven Sass informed federal bankruptcy court Judge Christopher Sontchi that he gave lenders ample time to request the documents — and that he has to pay $15,000 a month in storage and other costs at the underground parking garage at AMH’s former headquarters at 538 Broadhollow Rd., seen above.
(Compiled from reports from the Reuters wire service and Newsday staff.)
Read more of Inside Long Island Business