First Magnus Financial Corp., one of the largest independent U.S. mortgage lenders, said on Thursday it has stopped funding home loans and taking mortgage loan applications because investors are not buying its loans.
First Magnus said it halted lending in light of the collapse of the secondary mortgage market, according to a statement on its Web site. We explored all options before taking this action but were left with no viable alternative.
The company, based in Tucson, Arizona, said it stopped lending on Wednesday and that the decision covered future mortgage loans as well as mortgage loans previously originated but not yet funded.
First Magnus was the 16th-largest U.S. mortgage lender from January to June, originating $17.1 billion of home loans, according to Inside Mortgage Finance newsletter.
The company did not return a call seeking comment.
Dozens of mortgage lenders have quit the industry this year as defaults rose, housing prices stagnated, borrowing costs increased, and capital market conditions tightened.
Among these was American Home Mortgage Investment Corp, which was the 10th-largest lender before filing for bankruptcy protection on August 6. It is now liquidating.
The largest privately-held mortgage lender is Residential Capital LLC, a former General Motors Corp unit now controlled by a group led by private equity firm Cerberus Capital Management. It made $58.2 billion of loans in the first half, ranking seventh, according to Inside Mortgage Finance.
Countrywide Financial Corp, the largest U.S. mortgage lender, said on Thursday it tapped an entire $11.5 billion credit line to ease a credit shortage.
Founded in 1996, First Magnus said earlier this year that it operated in all 50 U.S. states, had more than 300 offices, and employed more than 5,000 people.