EXHIBIT 10.2

                              EMPLOYMENT AGREEMENT

            This Employment Agreement, effective as of June 30, 2005 (this
"Agreement"), is by and between American Home Mortgage Investment Corp., a
Maryland corporation having a place of business at 538 Broadhollow Road,
Melville, NY 11747 (the "Company"), and Thomas McDonagh, currently residing at
[_________] (the "Executive").

            Whereas the Company wishes to assure itself of the services of the
Executive, and the Executive desires to be employed by the Company, upon the
terms and conditions hereinafter set forth.

            The Company and the Executive hereby agree as follows:

            1. Employment. The Company agrees to employ the Executive, and the
Executive hereby accepts such employment by the Company during the term set
forth in Section 2 and on the other terms and conditions of this Agreement.

            2. Term. The term of this Agreement shall commence on June 30, 2005,
and shall terminate on June 29, 2006 unless terminated earlier pursuant to
section 6, below.

            3. Position, Duties and Responsibilities, Rights.

            (a) During the term of this Agreement, the Executive shall serve as
and hold the office and title of Executive Vice President and Chief Investment
Officer. The Executive shall have all of the powers and duties usually incident
to the office described above, and shall at all times comply with all policies
of the Company relating to the Executive's employment.

            (b) During the term of this Agreement, the Executive agrees to
devote substantially all the Executive's time, efforts and skills to the affairs
of the Company during the Company's normal business hours, except for vacations,
illness and incapacity, but nothing in this Agreement shall preclude the
Executive from devoting reasonable periods to (i) manage the Executive's
personal investments, (ii) participate in professional, educational, public
interest, charitable, civic or community activities, including activities
sponsored by trade organizations, (iii) serve as a director or member of an
advisory committee of any corporation not in competition with the Company or any
of its subsidiaries, or as an officer, trustee or director of any charitable,
educational, philanthropic, civic, social or industry organizations, or as a
speaker; provided, however, that the performance of the Executive's duties or
responsibilities in any of such capacities does not materially interfere with
the regular performance of the Executive's duties and responsibilities
hereunder.

            4. Place of Performance. In connection with the Executive's
employment by the Company, the Executive shall be based in Melville, New York,
and shall not be required to be absent from there on travel status or otherwise
for more than a reasonable time each year as necessary or appropriate for the
performance of the Executive's duties hereunder.

<PAGE>


            5. Compensation.

            (a) During the term of this Agreement, the Company shall pay the
Executive, and the Executive agrees to accept a base salary at the rate of not
less than $850,000.00 per year (the annual base salary as increased from time to
time during the term of this Agreement being hereinafter referred to as the
"Base Salary"). The Base Salary shall be paid in installments no less frequently
than monthly. Any increase in Base Salary or other compensation shall not limit
or reduce any other obligation of the Company hereunder, and once established at
an increased specified rate, the Executive's Base Salary hereunder shall not
thereafter be reduced.

            (b) The Executive shall be eligible to receive bonuses as follows:

                  (i)      No later than the last day of March, 2006, the
                           Executive shall be eligible to receive a bonus in an
                           amount between $50,000.00 and $200,000.000, subject
                           to section 5(b)(iv) below, to be determined by the
                           Chief Executive Officer of the Company (the "CEO")
                           based upon the CEO's evaluation of the Executive's
                           overall performance from January 1, 2005 through June
                           29, 2005.

                  (ii)     The Executive shall be eligible to receive, no later
                           than the last day of March, 2006, a bonus for the
                           period from June 30, 2005 through December 31, 2005
                           in the amount of $275,000.00, subject to section
                           5(b)(iv) below.

                  (iii)    The Executive shall be eligible to receive, no later
                           than the last day of March, 2007, a bonus for the
                           period from January 1, 2006 through June 29, 2006 in
                           the amount of $275,000.00, subject to section
                           5(b)(iv) below.

            Notwithstanding anything to the contrary in this section 5(b), the
Executive shall not be entitled to receive any bonuses previously earned but
unpaid if the Executive is no longer an employee of the Company on the bonus
payment date; except the Executive shall be entitled to bonuses previously
earned but unpaid if the Executive is no longer an employee of the Company on
the bonus payment date and the termination of the Executive's employment was by
the Company without Cause, or by the Executive for Good Reason. For purposes of
this Agreement, a termination of the Executive's employment by the Company for
any of the following reasons shall be deemed a termination for Cause:

                  (i)      default or other breach by the Executive of the
                           Executive's obligations hereunder; or

                  (ii)     failure by the Executive to diligently or competently
                           perform the duties assigned to the Executive
                           hereunder; or

                  (iii)    misconduct, dishonesty, insubordination, or other act
                           by the Executive detrimental to the Company or its
                           good will or damaging to its relationships with any
                           person or entity; or


                                      -2-
<PAGE>

                  (iv)     conviction of or plea of guilty or no contest to a
                           felony or any crime involving moral turpitude,
                           dishonesty, or theft.

            The Executive may resign for Good Reason (i) if the Company reduces
the Executive's rate of compensation; (ii) if the Company materially breaches
the terms of this Agreement; (iii) if the Company makes a material adverse
change to the Executive's responsibilities hereunder; or (iv) if any person or
entity, other than the Board of Directors of the Company as constituted as of
the date of this Agreement either individually, collectively or through an
entity created for the following purpose, obtains control of twenty five percent
(25%) or more of the voting securities of the Company, and the Executive's
responsibilities are diminished as a result thereof and the Executive
consequently resigns.

            (c) During the term of this Agreement, the Executive shall be
entitled to fringe benefits, in each case at least equal to and on the same
terms and conditions as those attached to the Executive's office on the date
hereof, as the same may be amended or modified by the Company from time to time.

            (d) The Executive shall be entitled to reimbursement, upon proper
accounting, of all reasonable expenses and disbursements incurred by the
Executive in the course of performing the Executive's duties hereunder.

            (e) The Company shall grant the Executive 30,000 stock options on
October 28, 2005, in accordance with the terms of the Company's 1999 Omnibus
Stock Incentive Plan ("the Plan"). Fifty percent (50%) of the stock options
granted shall be scheduled to vest two (2) years from the grant date, and the
remaining fifty percent (50%) shall be scheduled to vest three (3) years from
the grant date, subject to the terms of the Plan.

            6. Employment At Will; Severance.

            (a) The Executive's employment hereunder shall be at all times "at
will". The Company may discharge the Executive and terminate this Agreement at
any time and for any reason, and the Executive may resign from the Company for
any reason. If the Executive terminates the Executive's employment with the
Company, the Executive shall provide the Company with four weeks notice of such
termination pursuant to section 12 herein.

            (b) If the Company terminates the Executive's employment prior to
the expiration of this Agreement without Cause, or if the Executive terminates
his employment with the Company for Good Reason, the Company will pay the
Executive a severance award equal to $3,835.62 per day for the number of
calendar days from the date of such termination to June 29, 2006.

            (c) If any person or entity, other than the Board of Directors of
the Company as constituted as of the date of this Agreement either individually,
collectively or through an entity created for the following purpose, obtains
control of twenty five percent (25%) or more of the voting securities of the
Company, and the Executive's employment is terminated by the Company as a
result, or the Executive's responsibilities are diminished as a result thereof
and the Executive consequently resigns, then the Company or its successor shall
pay the Executive a


                                      -3-
<PAGE>

severance award equal to $3,835.62 per day for the number of calendar days from
the date of such termination or resignation to June 29, 2006.

            7. Confidential and Proprietary Information; Company Property. For
the purpose of this section, Confidential Information shall mean all information
and intellectual property owned by and proprietary to the Company, including but
not limited to customer or client information, contracts or agreements, data,
records, financial information, software, product information, strategic
business plans, trade secrets, manuals, business methodology and processes, and
cost and pricing policies; except Confidential Information shall not include
information or intellectual property of the Company described above which the
Company reasonably deems non-material, and when the disclosure of such
information or intellectual property will not have an adverse effect on the
Company. All Confidential Information disclosed or provided to the Executive by
the Company, or developed or created by the Executive during the term of the
Executive's employment with the Company, is, shall become, and shall at all
times remain, the sole and exclusive property of the Company. The Executive
agrees not to disclose the Confidential Information to any other party, except
to the extent that such disclosure is reasonably necessary in order for the
Executive to perform the Executive's responsibilities as an executive of the
Company. The Executive also agrees that the Executive will not use the
Confidential Information for any purpose other than to fulfill the Executive's
responsibilities as an executive of the Company.

            The Executive acknowledges, understands, and agrees that the
Confidential Information is of substantial value to the Company and that, in the
event of the use or disclosure of such Confidential Information in breach of
this Agreement, the resulting damages will be difficult, if not impossible, to
determine and that money damages will be inadequate. Therefore, without
prejudice to the rights and remedies otherwise available to the Company, and in
addition to such rights and remedies, the Company shall be entitled to equitable
relief by way of injunction if the Executive breaches or threatens to breach any
of the provisions of this Agreement relating to the Executive's use or
disclosure of any of the Confidential Information.

            The Executive further acknowledges that the Company may provide the
Executive with access to or use of equipment or other property owned or leased
by the Company ("Company Property"). The Executive agrees to abide by all
agreements and policies relating to the use of Company Property, as may be in
effect or modified from time to time at the sole discretion of the Company. The
Executive further agrees to promptly return in good working condition all
Company Property in the Executive's possession upon termination of the
Executive's employment with the Company for any reason, and shall be liable in
damages, including but not limited to replacement cost, for any financial loss
to the Company if Company Property is not returned in such manner.

            The Executive agrees that this section shall survive the termination
of this Agreement, and that all of the obligations of the Executive set forth in
this section shall remain in full force and effect after this Agreement is
terminated. The Executive further agrees that, upon termination of this
Agreement, the Executive will return to the General Counsel all Confidential
Information (including all copies of Confidential Information) which is then in,
or which later comes into, the Executive's possession or custody.


                                      -4-
<PAGE>

            8. Non-Solicitation; Non-Disparagement. The Executive agrees that:
(a) during the term of the Executive's employment with the Company, and for a
period of one (1) year after termination of the Executive's employment with the
Company, whether such termination is voluntary or involuntary, with or without
cause, the Executive shall not, directly or indirectly, influence or advise any
other person to employ or solicit for employment anyone who is an employee of
the Company; and (b) during the term of Executive's employment with the Company,
and for a period of one (1) year after termination of the Executive's employment
with the Company, whether such termination is voluntary or involuntary, with or
without cause, the Executive shall not, directly or indirectly, influence or
advise any person who is an employee of the Company, to leave the employment of
the Company, and shall not employ any person who is an employee of the Company.
The Executive expressly agrees that this section is fair and reasonable and that
Executive is being adequately compensated for agreeing to the terms of this
section. The Executive's obligations as set forth in this section shall survive
the termination of this Agreement.

            The Company and the Executive agree that neither will disparage the
other, and that their representatives will not disparage either party hereto.

            9. Non-Compete. The Executive agrees that, during the term of the
Executive's employment with the Company, the Executive shall not, directly or
indirectly, engage, participate, make any financial investment in, or become
employed by or render advisory or other services to or for any person, firm,
corporation or other business enterprise which is, or is reasonably likely to
become engaged, directly or indirectly, in competition with the Company in any
county in which the Company is doing business at the time the Executive's
employment with the Company terminates; except the Executive may make an
investment, otherwise prohibited by this section, in one percent (1%) or less of
the outstanding stock of a company publicly traded on the New York Stock
Exchange, NASDAQ, or the American Stock Exchange. The Executive expressly agrees
that this section is fair and reasonable and that the Executive is being
adequately compensated for agreeing to the terms of this section.

            10. Entire Agreement; Amendment.

            (a) This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof and supersedes any and all other
agreements between the parties, their predecessors and affiliates.

            (b) Any amendment of this Agreement shall not be binding unless in
writing and signed by both the CEO and the Executive.

            11. Enforceability. If any provision of this Agreement is determined
to be invalid or unenforceable, the remaining terms and conditions of this
Agreement shall be unaffected and shall remain in full force and effect, and any
such determination of invalidity or enforceability shall not affect the validity
or enforceability of any other provision of this Agreement.

            12. Notices. All notices which may be necessary or proper for either
the Company or the Executive to give to the other shall be in writing and shall
be sent by hand


                                      -5-
<PAGE>

delivery, registered or certified mail, return receipt requested or overnight
courier, if to the Executive at [_________] and, if to the Company, to it at its
principal executive offices at 538 Broadhollow Road, Melville, NY 11747,
Attention: Human Resources Director, with a copy to the Company's General
Counsel, and shall be deemed given when sent. Either party may by like notice to
the other party change the address at which it is to receive notices hereunder.

            13. Counterparts. This Agreement can be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page.

            14. Facsimile Signatures. A facsimile copy of either party's
signature shall be deemed as legally binding as the original signature.

            15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND BE
ENFORCEABLE IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.


                                      -6-
<PAGE>


            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date below.


                                         American Home Mortgage Investment Corp.

Dated:  11/14/05                         By: /s/ Michael Strauss
                                            -----------------------------------
                                         Name:   Michael Strauss
                                         Title:  Chief Executive Officer

Dated:  11/14/05                         /s/ Thomas McDonagh
                                         --------------------------------------
                                         Thomas McDonagh