AGAIN WITH THE AUDITORS

In some cases, the accountants had some hard choices to make. According to this Bloomberg report, two mortgage companies, American Home Mortgage Investment Corp. and HomeBanc Corp., had clauses in their lines of credit agreements that stated they would automatically be in default if auditors declared that there was a subtantial doubt about their ability to be going concerns.

On the one hand, that would've ended American Home right then; on the other, it would have avoided any investors buying the later public offering:

Then again, looking back, a self-fulfilling prophecy would have spared investors from the company's April 30 public offering of 4 million shares at $23.75 each, the prospectus for which incorporated Deloitte's audit opinion. American Home's shares closed yesterday at 22 cents.