Aegis Mortgage, formerly one of the nation's largest lending operations and controlled by private equity giant Cerberus Capital Management, filed for bankrutpcy protection today. (You read that right -- a lender controlled by a private equity firm filed for bankruptcy). From Reuters:
The Houston-based lender and several affiliates filed for protection from creditors with the U.S. Bankruptcy Court in Wilmington, Delaware ... Aegis has described itself as one of the 30 largest U.S. mortgage lenders. It made "prime" and "Alt-A" wholesale loans, and "subprime" retail and wholesale loans to residential borrowers who couldn't qualify for the best rates. In court papers, Aegis listed more than $100 million of assets, and estimated it owes more than $600 million to creditors. The latter included $178 million of unsecured debt owed to Madeleine LLC, a Cerberus affiliate that has an 80.9 percent equity stake, the papers show.
The New York Times lists Countrywide and Morgan Stanley as outside creditors owed millions as well. So much for the theory that said a private equity owner with deep pockets was a safe haven for a troubled lender.