Freddie Mac deal means tax will be paid

NEW YORK - Mortgage financier Freddie Mac said yesterday it settled a dispute with bankrupt loan servicer American Home Mortgage Corp., clearing the way to pay $2.4 million in delayed property taxes on behalf of thousands of homeowners.

Last week Freddie Mac warned in a lawsuit the homeowners faced an "imminent risk" of losing their homes unless it was able to recover files for 4,547 loans - worth about $796.8 million - from American Home Mortgage, which filed for bankruptcy Aug. 6.

"The money was wired [Tuesday] night so all tax and insurance payments should be up to date," said Freddie Mac spokesman Brad German.

Homeowners are ultimately responsible for being current on tax and insurance payments, even if the money is sent to a loan servicer and put in an escrow account, consumer lawyers said.

In its court filing last week, Freddie said it fired American Home Aug. 1, but that the servicer refused to release the associated loan files. Freddie was able to seize $5.5 million in principal, property tax, and insurance payments held by American Home, it said. But without the files, the company could not transfer match the funds to the mortgage.

Meanwhile, American Home stopped making tax and insurance payments Aug. 24 on all the loans it serviced, Freddie said in the court filing.