First Magnus Financial Corp. says it has stopped accepting mortgage loan applications and will not fund previously originated loans.
The privately held, Tucson, Ariz.-based Alt-A lender blamed an inability to sell its loans in the secondary market for the abrupt closure.
“In the light of the collapse of the secondary mortgage market, First Magnus will not fund any future mortgage loans and is no longer accepting any mortgage loan applications or funding any mortgage loans previously originated and not yet funded,” the company said in a message posted on its Web site.
The Arizona Star, citing sources at First Magnus’ retail arm, Great Southwest Mortgage, said the lender is experiencing problems similar to those at American Home Mortgage, which filed for bankruptcy protection this month after it said it was unable to meet creditors’ margin calls.
In a press release earlier this year, First Magnus described itself as “one of the largest privately held mortgage banking operations in the United States,” making more than $30 billion loans in 2006 in all 50 states, and employing more than 5,000 workers at 300-plus offices. The company claimed to be the 12th-largest mortgage wholesaler and a top-10 wholesaler in Alt-A mortgages.
The Arizona Star reported that First Magnus was unable to obtain a charter from federal regulators last year to start up a new federal savings bank.
Last year, First Magnus sued six businesses and 28 individuals in the Kansas City, Mo., area, claiming it was the victim of a mortgage fraud scheme that forced it to foreclose on 19 homes.