Sounds like those former employees who said that First Guaranty Mortgage Corporation was “essentially shuttered” weren’t wrong. The Plano-based lender and its affiliate, Maverick II Holdings, have filed for Chapter 11 bankruptcy protection.
First Guaranty laid off approximately 75 percent of its workforce last Friday in a mass call, citing “significant operating losses and cash flow challenges due to unforeseen historical adverse market conditions for the mortgage lending industry, including unanticipated market volatility.”
“While we have made considerable efforts to address our ongoing financial challenges related to the state of the mortgage market, we ultimately must do what is best for our borrowers and consumers,” Aaron Samples, chief executive officer of FGMC, said in a press release. “After careful review and consideration, the Company determined that pursuing the protections of chapter 11 is the right and responsible path at this time. As part of this process, the Company retained a portion of its workforce to manage the day-to-day business. We are requesting that the court approve a variety of motions that will promote a smooth transition for all pertinent parties while also preserving value for the benefit of the Company’s stakeholders.”
First Guaranty says that the bankruptcy filing in the U.S. Bankruptcy Court for the District of Delaware will not affect closed mortgages, which are already serviced by third parties.
