Mortgage lender lays off nearly 6,000

[OhioChick]

Source: Zee News/India

Tuscon, Arizona, Aug 18: First Magnus Financial Corp., a national mortgage lender that is suspending operations, says it has laid off 99 percent of its nearly 6,000 employees nationwide and closed all of its more than 300 offices.

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

First Magnus officials said a bankruptcy filing was possible.

On Thursday, First Magnus announced that it had stopped originating new 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, even though First Mangus was not engaged in selling "sub-prime" mortgages that sparked the crisis in recent months.


Read more: http://www.zeenews.com/articles.asp?aid=389476&ssid=51&ssname=World&sid=BUS&sname=LATEST-BUSINESS-NEWS

[dipsydoodle]

1. Good

Anyone who's ever been involved in what amounts to direct selling will know that the only beneficiaries of this issue have been the salesmen. In this instance I'd guess they're not much good at selling anything else anyway - wankers.

Thus speaks an ex-photocopier salesman :)

[Deja Q]

5. Ah, yes. The other C-word. "Commission".

[dipsydoodle]

8. There were times

when seemed even better than the other c word - well for a seconds or so anyway :rofl:

Seriously though yes commission - that's what has caused this to spiral out of control. It's been a classic case of making bucks easily by simply mis-selling. I wouldn't betting there were even instances of "sign here and I'll fill the form out for you later"

Over here our Financial Services Act protects consumers against mis-selling and when it's become apparent , even years later , that mis-selling occured the consumers get refunds. I appreciate that even that wouldn't help much over your side when someone has already lost their home.

[havocmom]

16. You know diddly about this event, evidently

Lots of (if not MOST) of the laid off workers were hourly or salaried support people

The guys at the top were the villians, not the people who got laid off.

[dipsydoodle]

22. More likely, overall, to have been the

brokers.

My sympathies do lie with the hourly staff etc and even more so with the home owners. You however must remember that they only had those jobs in the first place because of the antics of the company.

And please don't tell me I know diddly. I'm probably older than you and could probably explain most financial scams in living memory. My wife even worked for IOS back in the sixties http://en.wikipedia.org/wiki/ I could also give you chapter and verse on what, for example, made Atlantic Computers fold http://news.bbc.co.uk/1/hi/business/the_company_file/250960.stm All you'd need is something like an HP 17b Financial Calculator. So assuming you do know diddly please confirm you've got one and can use it and then I'll explain further.

[noahmijo]

27. Ohhhh that's why the animosity. Brokers and Lenders are like Yankees and Red Sox

You're just playing off an age old rivalry sorry I even wasted my time debating you.

BTW if I may apply YOUR logic then I might say something like all brokers are crooks and deserve to be tossed out onto the streets like the bums they are.

For the record I once had an excellent broker who was fired for daring to care more for me, the client, as opposed to doing what was best for her firm.

She was quickly replaced by a company spokesmouth much to my displeasure. Point being not everybody within "a group" is a scumbag rivalries included.

[dipsydoodle]

28. I am a broker

but not in consumer business and nothing other than normal leasing anyway. Toss me out in the street if you wish but I work from home so I'll just walk back in the door.....lol.

I'm not distinguishing between brokers and lenders. The brokers are acting on behalf of the lenders - they are to a certain extent one and the same in that they are both taking commission. The main reason that the "primary" lender has gone under must be that their reduced income due to defaults gives them insuffiicent to service the loans they are using.They've been used to drawing down funds on demand and then in effect robbing Peter to pay Paul aka teeming amd lading whatever. Soon as the money supply dried up the merde hit the fan

I'd still maintain that the points I made were valid. Sub prime mortage business is risky - hence the high margins between what those companies were/are borrowing at and what they are lending it on at.

I'd already said I was sympathetic to those who'd lost their jobs and doubtless others who are about to do so elsewhere.

[havocmom]

31. I KNOW some of the people who were laid off. NOT commission people

for the most part. THAT is what you don't seem to know. MOST are the support people who back up the brokers by actually grinding out the work. Hourly employees for the most part.

You know about the industry, from the overview. I know about the people who lost jobs on Thursday and they were not the problem.

oh, and I am pretty damned old myself.

[noahmijo]

12. Wow what an expert you are. I take it you live in Tucson and know these people well

Well I do live in Tucson. I have done business with these people. They were people with families. Was every single one of them a perfect angel? Of course not. You'll find that even in a church not everyone is a perfect angel.

But many of these people whom I did know personally were good people who displayed professional and ethical behavior towards their clients. They did not deserve this. They committed the crime of pursuing a career in Finance and for many such types this is where they land. They did their time went through the struggle just like anybody in any profession and now they got slapped with this.

And then such individuals like yourself believe you're impressing us with the pair you think you're showing by slamming these people while they're now in despair wondering how they will take care of their families and if or when the company is going to make good on their promises to them.

Good Luck with that attitude. I'm sure it will pay off well if you ever wind up with everything swept out from under you.

[havocmom]

15. What noahmijo said!

Atta boy, noahmijo! Thank you for speaking up for the honest, hard working neighbors who got royally screwed.

The big boys play High Roller (like Tommy Boy S), make risky, aggressive moves instead of sound, long term policy decisions, and do the damage, but it is the worker bees, good neighbors and upright citizens who end up paying the price.

And other companies in Tucson will be in a world of hurt now. First Magnus was a sheltering umbrella for other things. Look for more layoffs in the companies that work with mortgage companies. I know lots of those folks, have known them for decades. Most are very good people who have worked their asses off for employers who are now screwing them.

[noahmijo]

21. And that's exactly it. The bigwigs NOT just your everyday employees

And what alot of people don't even understand is the fact that we're not just talking loan officers here: there were secretaries , accountants, hell even janitors that are now jobless.

The whole reason I felt the need to retort is because sadly this ignorant sentiment as portrayed by our pal here who enjoys referring to the laid off as "wankers" is the sentiment of many of the rubes here in Tucson and well it's the kind of thing that makes me ashamed to be a human when I see how callous and disrespectful certain ignorant members of our populace can be.

[Psephos]

37. You rise above ideology and express humanity. I can't say the same for your debate partner. n/t

[dipsydoodle]

23. There isn't anything ethical

about writing mortgage business based on a low or zero rated credit scores. Doing so ignores someones ability and willingness to pay. The foreclosure rate becomes inevitable and in a rising house market those holding the paper are laughing - not the owners who kicked out.

Your move sunshine.

[noahmijo]

24. You don't listen or read well do you?

Your pathetic excuse for a retort comes up as nothing but a blanket statement that attempts to define what I said as calling every employee of this company an angel.

I never said that every employee of this company is above criticism. I AM however saying that the majority of these people who fell victim to this company's shady dealings fathered by the CEO DO NOT deserve this and were largely the "peons"

But you are blatantly saying that everyone got what they deserved-whether or not they took any part in scandalous dealings.

That's the bottom line. These employees who were laid off were largely hourly peons who were given the opportunity to do nothing more than what they were told and believe me they didn't make out like bandits. It's easy to pass judgement and say "well they should've all just quit if they knew they were engaging in unethical behavior" reality check buddy boy it's not that easy and not that black and white all the time especially when you're not in any position to have enough information to know whether or not it's time to bail.

The decision to offer such loans doesn't stem from the peons, nor do the peons get the lion's share of it as evidenced by the very situation that is taking place. These were decisions that came from the top but as those of us all know shit freefalls (not rolls) downhill in such matters.

As I said, you don't live here, you don't know any of these people, feel free to further express your ignorance as it is your right to do so. Just understand that you will receive the same level of courtesy that you present.

[dipsydoodle]

26. Goodnight

.

[havocmom]

32. Most of those who lost jobs were not the ones deciding the loans

Process takes many hands.

Of course, many brokers just think they do it all and elves or something show up at night to actually do all the grunt paperwork

[Robbien]

2. Wow, that was fast.

A Google news search shows the first word of a problem with First Magnus is dated August 15th. Then there was a notice that employees were sent home on Thursday. Then this notice was apparently handed out at close of business on Friday.

Prior to the August15th story, there were no news stories in Google about First Magnus having a problem.

[havocmom]

6. Managers at the Tucson facility asked many employees to work overtime LAST WEEKEND!

And word is the employees may not get paid for the hours they worked for the whole last pay period! Some rumors that their 401s are also locked up.

My daughter has friends who work, errr, WORKED for 'Fat Mag'. Some of them found out on the way to work Thursday morning, via news on the radio. The newspaper had it for morning edition, which means THEY got it no later than 2AM.

People went to work to find others coming out of the building crying and carrying boxes of personal things. Security guards were there to watch over all the employees told to clean out their desks. So trusting is management... the same rat bastards (yeah, I'm talkin' to you Tommy Boy S, you coke snorting, poor excuse for a human being! You and your flunkies) who had people work overtime just last Saturday!

First Magnus was the 21st largest employer in AZ, I recall reading. Lots of people without paychecks. That has a tendency of rippling through the whole community.

Look for lots more worker bees getting royally screwed in VERY near future.

[UpInArms]

10. was really quick - almost surgical in its strike

here's all I saw on this (from the CBSMarketwatch ticker):

01. First Magnus says it's no longer funding mortgages
1:41 PM ET, Aug 16, 2007 - 3 minutes ago

02. First Magnus says it no longer taking mortgage applications
1:41 PM ET, Aug 16, 2007 - 3 minutes ago

[havocmom]

18. Quick? Workers got the news on radio on way to work Thursday

Jerk (mis)management!

I gotta wonder how much stock Tommy Boy and his old man dumped just before they shut the place down.

Last I heard, employees may not get paid for hours worked in last pay period and they cannot get to their 401s.

Hope Tom Sr. house on the islands get pummeled by storms and volcanoes, but I am just a bitch about fat cats who exploit, lie, and abuse.

[Robbien]

38. Something is really wrong here when there is no word about problems

None.

Then along comes a story about maybe a problem. Then the next day they send everyone home and scream bankruptcy.

Pee U. Something stinks here.

[havocmom]

39. Another report from the Tucson Daily Star

http://www.azstarnet.com/metro/197166.php

One tidbit the article doesn't mention: The young executives running things (well at least one that I know of for sure) was using the mortgage companies liquidity as a cash cow so he could hire personnel for another company or two, and offer WAY more than other companies in the area. He was head hunting and making really awesome offers than the more sensibly governed competitors could not touch. He milked the cash cow just to thumb his nose at what used to be friendly and industry concerned competitors. Hey, when daddy is the chairman of the board, what can go wrong, huh?

That cash cow, maybe it made them a little too greedy? Maybe a little too reckless in their policies? Maybe a little too eager to encourage too much aggression in their loan officers? A little too willing to bend rules? Bottom line NOW and don't worry about next year or even next quarter?

They will whine and blubber that it is the 'credit crunch' and that is partly so. But when the young turks spill the cash cows milk just to play rough and tumble in competition with related companies, like title insurance and escrow businesses, well, ya gotta lay some of the blame on POOR MANAGEMENT from the top. When they spend money like drunken sailors just because it is there TODAY and don't think about what happens when the market dives, THEY are the co-authors of their own tragedy.

Sadly, they are not the ones who end up paying for their arrogance and pettiness.

[Xipe Totec]

3. Here come 6,000 more foreclosures nt

[cliss]

25. 6,000, or 7 million?

I wonder. I've read on other blogs that there will be around 7 million homes moving toward foreclosure in September. Is there any truth to this? I don't know. I've heard that there will be an adjustment in millions of interest-only loans, and ARM's (adjustable rate mortgage).

Just imagine if that happens. That represents about 10% of the US population.

[Xipe Totec]

29. I'm just referring to these 6,000 that got laid off

It's going to be a domino effect as layoffs cause foreclosures, which in turn depress the local economy, causing more layoffs, which...

7 million foreclosures by september seems high; they're probably just referring to the number of adjustable rate mortgages whose rates will bump up and, potentially, cause the holders to default.

[havocmom]

35. But, when those 6000 can't circulate $$, other businesses suffer

and THEY have to lay off other workers... who then can't circulate $$...

lather, rinse, repeat until just about everybody is living in the park eating stone soup

[ooglymoogly]

4. here we go again

Those who survived Reaganomics while losing their shirts in the trickle-down economy will know what I mean.

[dickbearton]

14. A-hole Reagan began the decline...

The Criminal Bush will complete the fall.

[NYC]

7. Website re mortgage lenders and hedge funds.

http://ml-implode.com/

#123 on imploded lenders.

Posted August 16th:

http://ml-implode.com/imploded/lender_FirstMagnus_2007-08-16.html

Many have forwarded on to us an emailed announcement from First Magnus that appears to have been sent late yesterday evening that indicates they have ceased funding loans:

IMPORTANT NOTICE:

FIRST MAGNUS IS NO LONGER FUNDING ANY MORTGAGE LOANS

In 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. We explored all options before taking this action but were left with no viable alternative.

First Magnus values the relationships we have formed with all of our broker partners over the years and appreciate the trust you have shown in us. We are saddened that we will no longer have the opportunity to work with you.

For information about loans already submitted to First Magnus, please call 520.618.9000.

The Arizona Daily Star has reported on the closure here:

An e-mail Wednesday evening told branch managers of Great Southwest Mortgage, the retail arm of First Magnus, that the parent company was no longer funding loans. First Magnus ranked 61st in the Star 200 survey of the biggest employers of Southern Arizona, reporting 800 full-time-equivalent local employees.

"We will not be funding loans tomorrow," wrote Erik Lutz, the president and founder of Great Southwest. A manager with the company, who spoke on condition of anonymity, said he was told Wednesday evening that First Magnus was closing. However, he said Great Southwest hopes to stay in business by brokering loans elsewhere. "All my employees were unaware until I told them, and they were pretty shocked," the manager said late Wednesday. "As loan officers, we're going to move on to some different companies. We're still going to stay in our field. We're going to regroup and figure out the best places to go."

...First Magnus was founded in July 1996 by Tom Sullivan Sr., Tom Sullivan Jr. and G.S. Jaggi. The elder Sullivan helped start Title Security Agency of Arizona in the early 1970s and provided initial funding for First Magnus.

...First Magnus has described itself as "one of the largest privately held mortgage banking operations" in the country, lending in all 50 states.


Note: There's another website for hedgefunds.

http://hf-implode.com

[havocmom]

9. Here are some links from the Tucson Arizona Daily Star

And somebody ask MATCOM if he can lend me his mooning smilie. I have a message for Tommy Boy in Tucson. Tommy Boy and his daddy flew back to Tucson from Hawaii a few days early. They flew in on the private First Magnus jet. Employees figured it was to avoid that hurricane in the Pacific. Hell, no. It was to close up the shop. Tommy Boy is NOT a great communicator. No warning. No heads up. No admitting there were problems.

First Magnus sponsored El Tour de Tucson bicycle event just last November. Like to play high roller and all that. Here is a link to story index on the Star. Anything over a week old is a pay to read article from their archives. But check out items 8 & 9 on the story index on this page: (there are teasers)
http://nl.newsbank.com/nl-search/we/Archives?s_site=azstarnet&f_site=azstarnet&f_sitename=Arizona+Daily+Star%2C+The+%28AZ%29&p_theme=gannett&p_product=ADSB&p_action=search&p_field_base-0=&p_text_base-0=Magnus&Search=Search&p_perpage=10&p_maxdocs=200&p_queryname=700&s_search_type=keyword&p_sort=_rank_%3AD&p_field_date-0=YMD_date&p_params_date-0=date%3AB%2CE&p_text_date-0=-1qzY

August 16, 2007: First Magnus halts loans
http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=11B1BE6D48CC7CB8&p_docnum=1&p_theme=gannett&s_site=azstarnet&p_product=ADSB


August 17, 2007: First Magnus meltdown may scar Tucson deeply
http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=11B1BE6DE5744990&p_docnum=3&p_theme=gannett&s_site=azstarnet&p_product=ADSB

August 17, 2007 Impact of collapse widespread
http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=11B1BE6DB58CD108&p_docnum=4&p_theme=gannett&s_site=azstarnet&p_product=ADSB

August 17, 2007 Buyers, real estate agents scrambling for new loans
http://nl.newsbank.com/nl-search/we/Archives?p_action=doc&p_docid=11B1BE6DB8431B50&p_docnum=5&p_theme=gannett&s_site=azstarnet&p_product=ADSB

That last one, well it helps explain how this does not just affect workers at the company. Imagine you are just about to close on a new home purchase. Your old place has sold and you need to vacate that... You find out the company that was gonna lend on the new place closes their doors (and computers) overnight. Helluva mess for lots of people besides newly unemployed workers at Magnus.

Meanwhile, we are still treated to commercials for Countrywide, which is one of the companies that won't buy the new mortgages. Somebody is spending a lot of dough advertising what they ain't gonna sell for the time being.

[UpInArms]

11. and here's another ripple in that pond

Sentinel files for Chapter 11 bankruptcy

NEW YORK, Aug 17 (Reuters) - Sentinel Management Group Inc., a cash management firm serving the U.S. futures industry whose decision to freeze client accounts on Tuesday helped roil global financial markets, filed for Chapter 11 bankruptcy protection late on Friday.

The firm, which managed about $1.6 billion of assets, said in the filing that its board decided it was in "the best interests of the corporation, its creditors and other interested parties that a voluntary petition be filed ... in an effort to restructure the indebtedness of the corporation," according to a filing in the bankruptcy court for the Northern District of Illinois.

Sentinel told clients in an Aug. 13 letter: "we are concerned that we cannot meet any significant redemption requests without selling securities at deep discounts to their fair value and therefore causing unnecessary losses to our clients."

The Northbrook, Illinois-based firm said then that "we don't believe it is in anyone's best interest if a run on Sentinel took place and we were in a forced liquidation mode."

...more...

-- okay - if all of these places are locking their doors, declaring bankruptcy and running for the hills, how much more shit will hit the fan?

[havocmom]

13. And the CEOs in all industries that outsource will never admit

that lots of unemployed Americans are bad for business. They lock out the people who ARE the economy then wonder why they can't keep raking in the same numbers year after year.

Fuckers.

[UpInArms]

19. they will starve the goose that lays the golden egg

and bitch when the egg laying quits

[1932]

20. They won't bitch, because they'll have made their fortunes on the boom,

and they'll figure out some other way to make a fortune off the bust.

A lot of people got richer during the Great Depression too.

[havocmom]

34. Thinkin a lot of them will re-open soon, but with processing done in India

It has been going on for a few years now. My daughter is dealing with more and more calls from processing centers in India. Sadly, the workers THERE think Tucson and Texas are the same place. She is often treated rudely by people who call her title company in TUCSON to complain that they are not getting the policy info they need for deals in TEXAS and they give her shit for 'giving the run-around' when she tries to tell them SHE can't help them and she even tracks down and gives them the numbers they really need IN TEXAS.

Tax returns: more and more processed in India via private companies the Feds outsource their work to, who in turn outsource to cheaper labor abroad.

Mortgage processing is doing the same.

Fat Cats getting fatter all the while. You are right, they will survive, but only the fattest. The middle managers who have done their dirty work are screwed too. The ones who have served well and long are especially screwed.

[NYC]

17. Threats of legal action by clients may foreshadow flurry of same.

Sentinel Management Files for Chapter 11 Bankruptcy (Update2)

By Joel Rosenblatt

Aug. 17 (Bloomberg) -- Sentinel...which froze client withdrawals three days ago, filed for bankruptcy after a judge sought to block it from selling assets to hedge fund company Citadel Investment Group LLC.

Sentinel...stopped the withdrawals Aug. 14, causing brokers Farr Financial Inc. and Velocity Futures LP to sue.

Farr claimed the freeze blocked access to client funds. Velocity, joining the suit today, sought to keep its own clients' assets from being sold to Citadel because the assets are being sold at a 15 percent discount. The assets may have already been sold...

...The threats of legal action from the firm's clients may foreshadow a flurry of lawsuits across the industry, as asset managers battered by market declines are forced to unload holdings at fire-sale prices.

http://www.bloomberg.com/apps/news?pid=email_en&refer=home&sid=a8EhXQH8.XK4

[BootinUp]

30. Thats a big 'un

6000 geez.

Well, as the company officials said, it wasn't their fault, not a problem with their business plan or nuthin, completely out of their control. :eyes:

[DU GrovelBot]

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[jaybeat]

36. Does that mean my phone will stop ringing? (nt)