Home News First Guaranty Mortgage files for Chapter 11 after layoffs

First Guaranty Mortgage files for Chapter 11 after layoffs

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The sign can be found at the US Bankruptcy Court in Southern New York City, Manhattan, New York City.Reuters / Andrew Kelly

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  • First Guaranty Mortgage created a $ 10.6 billion mortgage in 2021.
  • Dismiss 80% of the workforce
  • The company accused the collapse of the secondary market for refinancing and mortgage mortgages

(Reuters)-Mortgage company First Guaranty Mortgage Corp said Thursday that it filed for bankruptcy in Delaware, dismissing 80% of its employees and suspending new lending.

Based in Plano, Texas, the company said it created a $ 10.6 billion mortgage in 2021. Submission to court In case of that bankruptcy. It entered Chapter 11 with a debt of over $ 473 million. This is primarily due to the banks that funded the company’s mortgages.

First Guaranty Mortgage suffered significant operating losses due to the deterioration of the mortgage market, including the “dramatic collapse of the mortgage refinancing market and the weakening of the mortgage purchase market”, which was exacerbated by the shortage and increase in housing inventories. He said he suffered a cash flow challenge.Affordable US issues

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Mortgage rates Rapid increase Earlier this month, it was the largest rise since 1994, after the Federal Reserve raised interest rates by three-quarters percentage points.

First Guaranty Mortgage said it was moving at a pace of launching much less mortgages this year and $ 500-6 billion new loans compared to the $ 11 billion launched in 2021. rice field. In addition, the profit from resale is decreasing. The loan caused the company a net loss after tax of $ 23.3 million in the first four months of 2022.

First Guaranty Mortgage said in a press release that existing mortgages are provided by third parties and are not affected by bankruptcy filings.

The company is preparing to finance a bankruptcy case and is considering all available restructuring options, said CEO Aaron Sample.

The company’s final bankruptcy loan will allow it to continue its business and respect its promise to fund already approved mortgages, according to a statement that it will pave the way for an ongoing loan pipeline. Hired a potential partner to support.

Shortly before the submission of Chapter 11, the company dismissed 471 of its 600 employees, according to court documents.

Due to rising mortgage rates and lower demand for home purchases Contribute to layoffs JPMorgan Chase’s mortgage division has reduced staff for real estate brokers Compass Inc and Redfin Corp.

The first guaranteed mortgage will appear on Friday at the first hearing at the Bankruptcy Court in Wilmington, Delaware.

The case is In re First Guaranty Mortgage Corp, US Bankruptcy Court, Delaware District, Nos. 22-10584.

For the first guarantee: Mary Caloway and Laura Davies Jones

Pachulski Stang Ziehl & Jones

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