CREDIT CRUNCH GETS LOCAL

I haven't seen an analysis but Tucson may be headed for a recession. The housing industry is a HUGE part of the local economy and the bubble has burst.


First Magnus announces layoffs, halts new loan activity
By Jack Gillum
Arizona Daily Star
Tucson, Arizona Published: 08.16.2007


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.

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.”

First Magnus chairman: Recent events 'a knock-out punch'
By Christie Smythe and Becky Pallack
Arizona Daily Star
Tucson, Arizona Published: 08.16.2007

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.”

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.”

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

Housing market hurts Rio Nuevo
Key projects promised Downtown are delayed by private developers
By Rob O'Dell
Arizona Daily Star
Tucson, Arizona Published: 08.12.2007

Several key private-sector projects meant to be the backbone of Downtown redevelopment have been stung badly by the housing market downturn and won't be completed until at least 2009, stifling progress for Rio Nuevo.

In their bottom lines, many of the financial plans for residential development Downtown assumed the high prices seen during the real estate boom would continue, said local developer Randi Dorman.