From Bloomberg.com –

Investment bankers began shutting off credit to American Home, leaving the lender unable to fund at least $750 million in loans and stranding thousands of borrowers, according to a U.S. Securities and Exchange Commission filing by the company. …

American Home specializes in so-called Alt-A mortgages, an alternative for A-rated borrowers who can’t satisfy all the terms for a regular “prime” mortgage. The company was the 20th-largest Alt-A lender in 2006, according to March data from trade publication Inside Mortgage Finance.

Bids from investors for American Home’s loans began falling this year after defaults on U.S. subprime mortgages rose to the highest level since 2002. Investors were concerned that lax underwriting standards and growing fraud might lead to rising defaults on Alt-A loans.

The case is In re American Home Mortgages Holdings Inc., No. 07-11047, U.S. Bankruptcy Court, District of Delaware (Wilmington).