Mortgage Lender Institutes Major Changes

First Magnus Financial Corp., a large national mortgage lender that is suspending operations, says it has laid off 99 percent of its 6,000 employees in the U.S. and closed all of its 300 offices.

According to a notice filed with the state Friday, the Arizona home loan company that originated home loans and then bundled them into the secondary market expects to retain only about 60 of its employees.

Officials at Tucson-based First Magnus said a bankruptcy filing was possible as well.

Thursday, First Magnus announced it had stopped originating new home mortgage loans and was suspending operations.

Company officials said the lender was caught in the credit liquidity crunch now causing a meltdown in the mortgage industry.

This comes in spite of the fact that First Mangus was not engaged in the practice of selling “sub-prime” (bad credit mortgage) loans that sparked the crisis in recent months.

First Magnus, which calls itself one of the largest privately held mortgage banking operations in the country, funded more than $30 billion in loans in 2006.

The company’s retail outlets include Great Southwest Mortgage and Charter Funding, recently renamed First Magnus Home Loans.

SOURCE: International Herald Tribune