(Reuters) – Accredited Home Lenders Holding Co, one of the largest providers of U.S. subprime mortgages during the housing boom, is filing for Chapter 11 bankruptcy protection on Friday, said a source close to the matter.
San Diego, California-based Accredited is owned by U.S. private equity manager Lone Star Funds, which bought the lender in 2007 for $296 million.
The lender will wind down operations and is looking for a buyer of assets including its servicing business and properties owned through foreclosure, according to the source.
“Extremely challenging market conditions” led to the decision to file for bankruptcy, the source said.
Accredited last year tried to revive itself after ceasing to offer loans in August 2007. The company resumed making loans after its purchase by Lone Star and its executives expressed hopes that funding from securitizing mortgages into bonds would bounce back.
But credit markets continued to deteriorate, with losses on mortgages causing turmoil on Wall Street and playing a role in the fall of companies such as Bear Stearns and Lehman Brothers Holdings Inc (LEHMQ.PK).
Falling U.S. home prices and the recession have further darkened the outlook of mortgages and mortgage bonds, except for those guaranteed by the government or government-backed institutions.
Accredited produced as much as $2 billion in mortgages a month during the housing boom.
Accredited directors also appointed Meade Monger of AlixPartners as chief restructuring officer, the source said.