LoanCity - Alt A, A , Subprime Lender

Word started trickling in around mid-day today that LoanCity was shutting its doors:

It is with great regret and sadness that we announce the closing of LoanCity. Although the mortgage market continues to be a very challenging environment and we have taken measures to redirect our business, including our recent staff reductions and branch consolidations, we cannot meet the capital constraints needed to continue. We are doing this in order to make sure, at minimum, the Company is able to make payroll and compensate staff for the work that has been done, and not file bankruptcy.

We will fund loans until close of business, today, Tuesday, March 20.

Their website has a message that confirms that today is the last day they will be doing loans. LoanCity did up to $10 billion a year in A and Alt A paper. As one informant noted, "This has officially leaked into other markets than sub-prime."

Update: MortgageDaily.com reports ($) that LoanCity's investors were Bank of America, Etrade Group, Inc., and Morgan Stanley Dean Witter Equity Funding, Inc.

Update 2: Bloomberg reports, "LoanCity made about $6 billion in mortgages last year, went out of business on March 20."

Update, May 5th 2007: LoanCity's web site now contains just the following shutdown notice:

LoanCity is closed for business.
To our customers, our staff and our business partners - we sincerely thank you.