Another one bites the dust. The collapse of the mortgage industry players has been unreal to watch. Yesterday, Aegis Mortgage Corp. filed for Chapter 11 Bankruptcy protection after laying off most of it’s work force last week.

With the drying up of the secondary credit market the mortgage lenders that created and then sold their loans just do not have a business. It reminds me of the Pink Floyd line, “How can you have any pudding if you don’t eat your meat?” Today the line would be “How can you write a loan if you can’t sell it later?”

It is a cautionary tale of business that these huge companies were so beholden to a few large entities to purchase their loans. When the credit markets dried up so quickly, the companies were stuck. They could create the loans but they did not have the capital to fund them.

In court papers, Aegis – at one time one of the top 30 largest U.S. home lenders – said its estimated number of creditors is between 1,000 and 5,000. It also estimates both its assets and liabilities at more than $100 million.
Last Monday, Aegis said it had stopped taking new loan applications and, a day later, that it had laid off a “substantial” number of its 1,300 workers.
“We are working to wind down our business affairs as expeditiously as possible, with the goal of preserving Aegis’ value for the benefit of all parties concerned,” Dan Gilbert, Aegis’ chief executive, said in a statement. “We’re deeply disappointed that the rapid decline in market conditions compelled us to take this action.”  Forbes.com.

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2. General Growth Applies For 9.7 Billion Dollar Reorganization in Chapter 11 Bankruptcy
3. Capmark, Formerly GMAC Commercial, Files For Bankruptcy
4. Fairfield Residential Files For Bankruptcy