August 8, 2007 (LPAC)--A San Francisco-based mortgage lender, which is reported to have no sub-prime investments at all, appears to be following the giant American Home Mortgage down the tubes, according to MarketWatch.

Stock in Luminent Mortgage Capital fell 75% Tuesday, after the company, finding itself out of cash and hit by unpayable margin calls, canceled dividends and quarterly reports.

With only 20 employees and $365 million in annual loan originations, it is seen as a mine canary for other cases of high-end lenders. Luminent was investing mainly in Fannie Mae- and Ginnie Mae-rated prime mortgages. But the losses apparently came from bad investments in mortgage backed securities and collateralized debt obligations.

"Effectively, the secondary market for mortgage loans and mortgage-backed securities has seized up," the company said in a statement.