TUCSON, Ariz. — First Magnus Financial Corp., a national mortgage lender with operations in Hawai'i, says it has laid off 99 percent of its nearly 6,000 employees nationwide and closed all of its more than 300 offices nationwide.

According to a notice filed with Arizona officials yesterday, the Tucson-based company that originated home loans and then sold bundled loans into the secondary loan market expects to retain only about 60 of its employees.

First Magnus officials said a bankruptcy filing was possible.

On Thursday, First Magnus announced that it had stopped originating new loans and was suspending operations.

Company officials said the lender was caught in the credit liquidity crunch now causing a meltdown in the mortgage industry, even though First Magnus was not engaged in selling subprime mortgages, which sparked the crisis in recent months.

First Magnus, which called itself one of the largest privately held mortgage banking operations in the country, funded more than $30 billion in loans in 2006.

The company's retail outlets include Great Southwest Mortgage and Charter Funding, recently renamed First Magnus Home Loans.

The majority of the company's workers were sent home Thursday after clearing out their offices, said Gary Baraff, the company's senior vice president for marketing.

Bertha Wicker, a loan officer in 'Aiea, O'ahu, who joined First Magnus subsidiary Charter Financial about two months ago, said the announcement came completely out of the blue.

Employees were assuming their jobs were permanently gone now, she said.

"The job was very, very important and it's just something that came with no warning for us," Wicker said of the closure. "I guess we'll all have to find new jobs now."

The 'Aiea office is one of four Charter Financial outlets on O'ahu. A local representative did not return calls seeking further information about the company's O'ahu operations.

First Magnus originated home loans and then sold bundled loans into the secondary loan market.

"The line of credit available to us became sparse, and also we had issues selling loans that we had already funded on the secondary market," Baraff said. "So it's the liquidity issue that you've been reading about. Ironically we do no subprimes, so it's not that."

A bankruptcy filing was possible, Baraff said.

First Magnus was founded in 1996 by Tom Sullivan Sr., Tom Sullivan Jr. and G.S. Jaggi and is one of the largest national companies based in Tucson. The senior Sullivan is the current chairman of the board and personally put about $10 million into the company in recent weeks to try to keep it afloat.

The company's troubles are the latest in a series of meltdowns in the nation's mortgage industry that are blamed on delinquencies and other problems in the subprime lending market.

American Home Mortgage quit writing home loans Aug. 3 and filed for bankruptcy protection three days later, blaming its troubles on margin calls from banks that had provided it with the cash necessary to write mortgages. Last week, regional mortgage lender HomeBanc Corp. filed for bankruptcy protection in U.S. Bankruptcy Court in Delaware.

Leading lender Countrywide Financial Corp. said Thursday it had borrowed $11.5 billion from a group of 40 banks to fund loans, a move that shows just how deep the lending crisis has become.

First Magnus is still trying to determine what it will tell customers who have pending loan applications with the firm. The only notice for applicants Thursday was a message on the company's telephone line and Web site.

"In light of the collapse of the secondary mortgage market, First Magnus will not fund any mortgage loans after Wednesday, Aug. 15, 2007," the message said.

"Additionally, we are no longer accepting any mortgage applications or funding any mortgage loans previously originated but not yet funded."