Mortgage Companies, go away! Come again some other day!

Let the collapse of the mortgage market continue...

The big national news was for American Home Mortgage Investment Corp., which was recently reported to be the country's 10th largest mortgage lender, filed for bankruptcy protection on Monday, August 6. Ninety percent of the company's 7,000 employees found out all at once that their jobs had vanished.

The closure happened as American Home Mortgage's lenders no longer trusted its existing loan portfolio as sufficient collateral for credit lines to make new loans.

That was the national news. That doesn't affect you or I though, right?

Wrong. I have a home seller whose home is pending sale, and we are (were) scheduled to close escrow tomorrow, Aug. 8. The buyer's loan was being funded by Aegis Wholesale Mortgage, another large lender out of Houston with a local office in Modesto. The buyer's loan documents were scheduled to arrive from Aegis on Friday of last week. They didn't. On Monday morning, her loan officer called Aegis to follow up, and he found out that Aegis was not doing any new loans, nor funding loans currently in its pipeline.

When I called Aegis' local Modesto office branch this morning to verify, I was told that the entire company had folded, and that today is their last day. The company had 1,500 employees, with 14 in the local Modesto branch. An article at MarketWatch.com reported that Aegis was the 13th largest subprime lender nationwide.

The MarketWatch.com article also reported that National City Mortgage, which is the 13th largest mortgage originator nationwide of all types, also made the decision yesterday that "in response to market conditions, NHE has suspended approvals of new home equity loans and lines of credit" and that "the company continues to closely monitor the market and take the appropriate steps to respond to changing conditions."

That's what Aegis said on Monday, before they decided this morning that their "appropriate steps" included closing the entire company all at once.

If you know someone that worked at the Aegis office here in Modesto, please offer them your condolences. And hopefully the buyer in my transaction can get a new loan from a company that won't fold right in the middle of her loan processing.