First Magnus, the nation’s 22nd largest residential mortgage lender announced on their website this morning that they are no longer funding any home loans.
The company announced that it will no longer originate, fund, or continue processing loans already in progress.
In the past it was common for lenders who were winding down operations to fund loans that were already locked and processed, but it seems times have changed.
The notice on the First Magnus website said they had explored all possible options, but the collapse of the secondary market left them with no other alternatives.
It is believed that the company wasn’t able to meet margin calls, similar to the collapse of American Home Mortgage.
I had heard rumors of the company winding down earlier this week, though I also heard from mortgage brokers who were actively working on loans with the company.
Some brokers mentioned getting increased stipulations on their active loans, which is a common way of delaying the funding process.
First Magnus funded more than $30 billion in loans in 2006 and had more than 250 offices and 5,000 employees, as well as $17.1 billion in loan originations from January to June of this year.
The closure is believed to include retail outlets Charter Funding and Great Southwest Mortgage as well.
On Tuesday, First Magnus filed for Chapter 11 bankruptcy.
Update: The Arizona Department of Financial Institutions filed a complaint Friday against First Magnus and its subsidiaries, looking to fine the company for its abrupt closing.
Take a look at the latest list of closed lenders.