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The sudden halt in business at First Magnus Financial Corp. had local customers and real estate agents sweating the possible consequences on Thursday.

An unknown number of home purchases dependent on First Magnus financing are left in the lurch and would-be buyers and real estate agents are scrambling to find alternatives.

"It's been insane," said Jeff Johnston, 29, a first-time homebuyer who was waiting to sign loan documents with First Magnus when he heard the news. Luckily, he said, one of the company's brokers found him another lender, but he has yet to close the deal.

"I guess we're just really lucky that our loan officer was on the ball," he said.

Executives at Long Realty worked much of Wednesday evening to find other financing for buyers in some upcoming closings, said Rosey Koberlein, Long's CEO. First Magnus is a majority owner in Long's lending affiliate, Long Mortgage.

"Our priority is make sure our consumers have no interruption, or something that will put them in a vulnerable situation," she said.

Koberlein said her company was successful in finding other lenders.

Laura Mance, regional vice president of Coldwell Banker Residential Brokerage, said her office had already been checking loans in upcoming closings to make sure they were not at risk of falling through. The checks were launched in response to problems with other mortgage lenders, such as New York-based American Home Mortgage Investment Corp. — which is not affiliated with Tucson-based American Home Mortgage — and Countrywide Financial Corp.

First Magnus executives said they were forced to shut down lending by the company — the nation's 12th-largest wholesale mortgage lender — because they were no longer able to sell their mortgages to secondary buyers, which included Countrywide.

"In a general sense, I'm sure it's having an effect on a lot of people," Mance said. "From our perspective, it will hopefully be a non-event."

Local real estate executives and mortgage brokers said they expect the lender's negative effects on local real estate to be temporary because there is credit available to pick up First Magnus' would-be borrowers.

"There are plenty of other lending sources to get the job done, and get it done effectively," said Mark Tronziger, vice president of the Arizona Association of Mortgage Brokers and senior loan officer for Ventana Mortgage Corp.

"Bread and butter" home buyers — those who pay 10 to 20 percent down and opt for regular fixed-rate loans — should be fine, he said.

But other industry observers said the lender's collapse indicates lasting market problems.

"That is a big piece of bad news," said John Strobeck, a local housing-market consultant. "That tells us we're still turning down, and we're seeing the ancillary businesses suffering because of the downturn of the housing market."

There could be a longer-term impact on the number of buyers, said Marshall Vest, director of the University of Arizona Economic and Business Research Center.

"If you are a borrower — and we're not talking about merely subprime borrowers, we're talking about any borrowers — it's going to be more difficult to borrow money," Vest said.