Country-Fried: First Magnus Succumbs to Mortgage Mess

The First Magnus Financial Corp. website isn’t sugar-coating anything these days. A visit to the company’s revised one-page website shows a stark white background with the bold heading, Important Notice.

The “important notice” goes on to explain that the Tucson, Arizona-based company will not fund any future mortgage loans and is no longer accepting applications.

One of the nation’s largest privately held mortgage companies, it now plans to file for Chapter 11 bankruptcy protection and has laid off nearly all 5,000 employees across the country.

The employees at 300 offices nationwide were informed via email on Thursday.

The company blamed the shutdown on the “unprecedented conditions” in both the national real estate market and the secondary mortgage market.

This news trails Countrywide’s stock slump, and American Home Mortgage laying off 90% of its staff.

Substantial Reduction

The First Magnus email states, “Despite our efforts to continue normal operations, we have come to a point when we must substantially reduce our workforce. What this means for most of our employees is that Thursday, August 16, 2007, will be your last day of employment. Detailed information regarding payroll, benefits, and other human resource related matters will be available as soon as possible.”

As many as 800 employees in the company’s Tucson headquarters could be affected, according to the Tucson Citizen.

According to local news affiliate KVOA4, Hunter Sampsel, owner of American Home Mortgage in Tucson, has already hired 10 laid-off First Magnus employees and may hire another 25.

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“First Magnus had some very quality people and we certainly want to add some of those people to our staff. Good people in any industry always land on their feet and there are certainly going to be jobs available to those people,” Sampsel said.

Elsewhere in Arizona, the company’s Sierra Vista branch, open for about seven years, employed about 840 workers.

In Ohio, the company has two offices, opened just last year, which include about 15 workers in Cincinnati and 18 in Columbus.

In Austin, Texas, the company employed about 120 people in a brand-new 33,000 sq. ft. office. According to the Austin Business Journal, all employees are gone, the doors are locked, and the phones are disconnected.

So how is the company helping employees deal with payroll and benefits questions in light of these sudden layoffs?

Although employees were advised to call the human resources department (520-618-9000), they are met with a simple, automated greeting that prompts them to “leave us a message and we will return your call as soon as possible.”

Elaine Rigoli has nearly 15 years of experience managing content and community for various B2B and consumer websites. Elaine has written thousands of business and technology articles and has been quoted in The Wall Street Journal and eWeek, among other publications.

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