Chris Richards / Arizona Daily Star

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First Magnus Financial Corp. announced this morning that it would substantially cut its workforce, after announcing to its employees late Wednesday that it would stop writing loans today.

Employees at the Tucson-based mortgage firm, headquartered at 603 N. Wilmot Road, were leaving this morning with packed boxes - many with downtrodden faces and some uncertain about what to do next.

“You can't plan for something like this,” said Aaron Phillips, 29, who worked for the company for five years. He said his next plan is to send out resumes and look for another job.

First Magnus reported 800 full-time-equivalent local employees at the end of 2006 and ranked 61st in the latest Star 200 survey of the major employers of Southern Arizona.

Nationwide, the company has more than 350 offices and more than 5,000 employees, and it funded loans in excess of $30 billion in 2006.

In an e-mail sent out early Thursday morning, senior First Magnus executives said the nationwide credit crunch forced the company to stop writing or funding new mortgage loans and lay off workers:

“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. First Magnus fully expects to pay all employees their wages due but you should expect a short delay in payroll.”

Countrywide Financial Corp., the nation’s largest mortgage lender and a major buyer of First Magnus loans on the secondary market, today said it had borrowed $11.5 billion from a group of 40 banks to fund loans as it fights to stave off collapse.

First Magnus said it was halting new loan activity in e-mails to employees and phone messages at its offices.

“In the light of the collapse of the secondary mortgage market, First Magnus will not fund any future mortgage loans and is no longer accepting any mortage loan applications or funding any mortgage loans previously originated and not yet funded.”