PHOENIX - First Magnus Financial Corp. filed for bankruptcy Tuesday, less than a week after the Tucson-based national mortgage lender suspended its operations.

The lender's total assets were estimated at more than $942 million and its total liabilities at nearly $813 million in the company's bankruptcy petition, which was filed in U.S. Bankruptcy Court in Tucson.

"After carefully considering our options, a Chapter 11 filing provides First Magnus with the ability to realize the highest value of our assets for our creditors," First Magnus President and Chief Executive G.S. Jaggi said in a news release.

First Magnus, which originated home loans and then sold bundled loans into the secondary loan market, stopped taking mortgage loan applications and fired 99 percent of its 6,000 employees Thursday.

Among its debts, First Magnus owes $5 million to the National Bank of Arizona and $2.8 million to WNS North America, a business process outsourcing firm headquartered in Mumbai, India.

First Magnus also still owes employees about $13 million from the last pay period, company spokesman Gary Baraff said. That's why, he said, the company made that amount its No. 1 request in the bankruptcy filing. "Nobody in the company has been paid, including the CEO," he said.

He said everyone at First Magnus is still reeling from the shock of the company's downfall.

"The company went out of business overnight," Baraff said. "Three weeks ago we were at the apex of the company's history. Everything was falling into place for us, and we had remarkable momentum across the country. It was shocking to everyone that essentially the secondary market collapsed."

First Magnus was caught in the credit liquidity crunch now causing a meltdown in the mortgage industry, even though it was not engaged in selling "sub-prime" mortgages that sparked the crisis in recent months.

American Home Mortgage quit writing home loans Aug. 3 and filed for bankruptcy protection three days later. Last week, regional mortgage lender HomeBanc Corp. filed for bankruptcy protection in U.S. Bankruptcy Court in Delaware.

Leading lender Countrywide Mortgage said last week 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.

On Friday, the Federal Reserve slashed its discount rate by a half percentage point to 5.75 percent, giving the market a boost in the Fed's most dramatic effort yet to alleviate fears about tightening credit and calm the global financial markets.

Baraff said company officials don't believe they would be in a better position today if they hadn't suspended operations Thursday just before the Fed's boost.

"I can't imagine us feeling any worse than we do, but I guess if we could have avoided this by waiting another 24 hours, that would have been even worse," he said. "But that wouldn't have helped us."

First Magnus, which calls 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.