MORTGAGE FINANCE

MORTGAGE FINANCE

Aegis Shuts Operations

Aegis Mortgage, ranked among the 20 biggest subprime lenders last year, shut its mortgage operations and dismissed employees, citing "extreme changes" in home-loan markets. Spokesman Fred Lowery declined to say how many workers were fired. Aegis employed 1,300 people nationwide, spokeswoman Pat Wente said Monday.

Aegis, part-owned by hedge fund manager Cerberus Capital Management, stopped taking applications from individual home buyers in June, according to its Web site. An Aegis unit that handles billing and collections remains open, the company said.

ECONOMY

Productivity Rebounds

The Labor Department reported that worker productivity rose at an annual rate of 1.8 percent in the April-June quarter, more than double the 0.7 percent pace of the first three months of the year. Meanwhile, unit labor costs rose at a 2.1 percent rate, marking the second consecutive quarter that wage pressures have eased.

REGULATORS

First BanCorp Settles With SEC

First BanCorp, the parent of FirstBank Puerto Rico, will pay $8.5 million to settle Securities and Exchange Commission allegations that it helped Doral Financial use phony mortgage sales to overstate profit. First BanCorp misled investors about the true nature of more than $4 billion in mortgage-related transactions with Doral from 2000 to 2005, the SEC said in a lawsuit.

LEGAL

Cendant's Ex-Chairman in Prison

Former Cendant chairman Walter Forbes began serving a 12-year prison term for directing an accounting fraud. Forbes, 64, reported to Allenwood Federal Correctional Complex, a low-security facility in White Deer, Penn., said Bureau of Prisons spokesman Mike Truman.

He was convicted Oct. 31 of overstating income by $252 million at CUC International, which merged with HFS to create Cendant.

Katrina Insurance Suit Halted

A whistle-blower lawsuit accusing insurers of overcharging the federal flood program for Hurricane Katrina damage was halted after the Justice Department said the case may compromise a criminal investigation.

The suit, unsealed by a federal judge in Mississippi over the objection of prosecutors, was filed by Richard Scruggs, a lawyer for hundreds of Katrina victims. U.S. Attorney Dunn Lampton said in legal papers that it would be harder for his investigators if lawyers in the civil case were interviewing potential witnesses.