Aegis Mortgage becomes latest mortgage loan lender to file Chapter 11 bankruptcy

By Jennifer Lanning Drey

Portland, Ore., Aug. 14 - Aegis Mortgage Corp. filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware.

The company said in court documents that it had received "an unprecedented amount" of capital calls, which were due and payable on Aug. 3.

The capital calls resulted from extreme changes in the markets and the immediate financial challenges resulting from a decline in conditions in the secondary mortgage market and the national real estate market, according to Aegis.

The company also said its cash was siphoned away in the first part of 2007 when Aegis experienced a significant increase in early payment defaults on its loans and a corresponding increase in the number of repurchase requests submitted because of the defaults.

Aegis in turn defaulted on its warehouse credit facilities, as the company did not have significant cash for margin calls from certain lenders. As a result, the warehouse lenders terminated the company's available financing.

Aegis stopped all mortgage origination activity on Aug. 3.

In conjunction with its discontinuation of mortgage originations, Aegis also filed a motion to sell loans owned by the company as well as to sell certain loans that are part of the portfolio of Aegis' warehouse lenders.

Aegis said in the motion that the ability to sell the loans is critical to maximizing creditor outcomes in the Chapter 11 case.

At July 31, Aegis had generated approximately $800 million in monthly loan originations and was servicing approximately $3.6 billion of mortgage loans, the company said in the motion.

According to court documents, the company's largest unsecured creditors include Morgan Stanley, with a $15.92 million claim; Countrywide, with a $14.27 million claim; EMC, with a $10.80 million claim; Aurora Loan Services, with a $8.73 million claim; Goldman Sachs, with a $8.04 million claim; IndyMac, with a $7.36 million claim; CitiMortgage, with a $6.42 million claim; RFC, with a $5.52 million claim; WAMU, with a $2.58 million claim; Deutsche Bank, with a $1.30 million claim; and Bain & Co., Inc., with a $1.13 million claim.

A hearing on first-day motions has been scheduled for Wednesday.

Aegis Mortgage is a Houston-based mortgage production franchise. Its Chapter 11 case number is 07-11119.

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