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Aegis Abandons Originations

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Mortgage Daily

                                                 August 8, 2007

Aegis Mortgage Corp. has exited mortgage lending, laid off a significant portion of its staff and decided to operate solely as a servicer.

The Houston, Texas-based lender “has been forced to cease mortgage origination activity and, accordingly, is no longer taking mortgage applications,” Aegis said in an announcement Tuesday.

As a result, Aegis said it terminated a substantial number of its employees.

“The change in market conditions, coupled with the rapid decline in the secondary mortgage market has forced Aegis to take this action, despite the best efforts of our management team and hard-working employees,” Aegis Chief Executive Dan Gilbert said in the announcement. “We believe that making these changes in our business operations and the resulting staff reductions are necessary to address our financial challenges. We sincerely regret the impact that this necessary decision will have on our employees.

Aegis — owned by Cerberus Capital Management, which has an indirect controlling interest in Residential Capital LLC and is in the process of acquiring Option One Mortgage Corp. — had lending operations in 50 states and offices in 24 states, according to yesterday’s announcement.

Aegis described itself as one of the top 30 largest mortgage production franchises in the country, according to its Web site.

“With nearly 1,500 employees nationwide, we work through strong relationships with independent brokers,” Aegis additionally stated on its site.

The last of a series of product and guideline changes over the past few weeks came on Thursday, when Aegis announced to brokers a temporary suspension on several products and further guideline revisions.

Temporary suspensions were issued on PreferenceOne loans, option ARMs with 1, 3 and 0 month and 5 year-fixed terms, Alt-A Select Second Liens, home equity lines of credit and closed-end seconds. The company also modified documentation types for Alt-A and other option ARMs, and revised guidelines on remaining first lien products to accept only full/Alt Doc, stated income stated asset on an automated underwriting basis for certain loans, and stated income verified assets on the basis that LTV/CLTV did not exceed 80 percent and the FICO was a minimum of 680, according to Thursday’s announcement.

Aegis apparently stopped funding loans on a retail basis on June 20, according to a message posted on the otherwise defunct Web site of Aegis Lending Corp. that directs visitors to Aegis Wholesale Corp.

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