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The chairman and co-founder of First Magnus Financial Corp., Thomas Sullivan Sr. , said this morning that the company tried to stave off financial disaster, but called recent events “a knock-out punch.”

“I’m very proud of what our company has done in the last 11 years,” he said at the company’s headquarters at 603 N. Wilmot Road. “It’s a sad day for Tucson.”

Sullivan said the company previously appeared to be staying clear of many of the problems faced by other mortgage lenders. Unlike some lenders, he said First Magnus had stopped offering loans to subprime borrowers — those which have been most at risk of falling into default and foreclosure.

But about two weeks ago, the company found it could no no longer sell loans to secondary buyers, which included troubled mortgage lender Countrywide Financial Corp.

First Magnus does not keep loans, but rather sells all of its mortgages to secondary buyers, Sullivan said.

“We just can’t sell the existing loans because nobody’s buying right now,” he said. “The liquidity has just evaporated.”

Sullivan said he injected about $10 million of his own money into the business when the market dried up, but it wasn’t enough to keep the company afloat.

Earlier today, First Magnus staff members received e-mails describing the company’s predicament and notifying them that Thursday would be last day of work for most employees. The company said it fully expects to pay employees but they “should expect a short delay in payroll.”

First Magnus, which did business across the nation, has about 6,000 employees nationwide and 800 in Southern Arizona, according to Gary Baraff, vice president of marketing for the company. It funded $2.5 billion in loans last month, according to Sullivan.

The corporation includes retail arms Great Southwestern; and Charter Funding, which was recently renamed First Magnus Home Loans as part of a nationwide-branding effort.

Executives are now considering filing for bankruptcy protection, Sullivan said, but he remained optimistic that the company might eventually get back on its feet.

“I commend the employees who have worked here,” he said. “Some of them hopefully will work for us again when we get off the mat.”