Sorting...
Please wait.

Tuesday, January 02, 2007 3:33 PM ET
Another subprime lender down for the count
Article
Related Content
To receive real-time alerts for stories on similar topics, click here.

By

Tools
Increase Font SizeDecrease Font SizeEmail this StoryExport to Acrobat PDFDisplay Printable View
Related Companies
Mortgage Lenders Network USA Inc.Middletown, Connecticut
Ameriquest Mortgage Co.Orange, California
Countrywide Financial Corp.Calabasas, California

Mortgage Lenders Network USA Inc. is apparently the latest in a series of mortgage lenders that target subprime customers to succumb to a difficult operating environment after engaging in a rapid expansion.

The Middletown, Conn.-based company, which specialized in nonconforming and Alt-A products, "is not currently funding loans or accepting new loan applications through the prime and nonprime operating units," according to a recording on the main phone line for its Southeast regional office. "We are currently exploring strategic alternatives for the wholesale business line."

The recording went on to refer callers seeking information about loans in the pipeline to business development managers. Calls placed Jan. 2 to other Mortgage Lenders Network offices were not answered.

The news follows a statement issued Dec. 8 by CEO Mitchell Heffernan, amid market rumors about Mortgage Lenders Network's liquidity position, that the company was actively accepting loan submissions as well as engaging in loan funding and servicing.

"As we look to 2007 and beyond, MLN continues its growth and expansion with the construction of our new corporate headquarters in Wallingford, Conn., and the opening of new facilities in our regional operations throughout the U.S.," Heffernan said in that statement.

The company ranked as the 15th-largest originator of subprime loans during the third quarter, according to a National Mortgage News survey, with volume totaling nearly $3 billion. It ranked one spot above Ownit Mortgage Solutions, which closed Dec. 7 and filed for protection under Chapter 11 of the U.S. Bankruptcy Code on Dec. 28.

Mortgage Lenders Network's volume soared in 2006 even as the industry's challenges related to repurchase requests triggered by early payment defaults and other credit-related issues mounted. The company's originations through the first half of 2006 exceeded levels in the year-earlier period by 232%, according to National Mortgage News, and the Mortgage Lenders Network Web site still offered at press time an outline for full-year originations of more than $12.1 billion and a servicing portfolio valued at $15.6 billion.

According to SNL data, Mortgage Lenders Network originated $4.9 billion in mortgages in 2005. It ranked among the top 35 funders in each of Massachusetts, New Hampshire, Connecticut, Rhode Island, Vermont and Maine, according to Home Mortgage Disclosure Act data now available on SNL Interactive.

Other subprime wholesalers to close in December included Harbourton Mortgage Investment Corp. and Sebring Capital Partners LP. Numerous other companies in the industry have sold, or are seeking to sell, their operations. Mortgage Lenders Network is joined on the selling block by some of the subprime sector's leading originators, including Ameriquest Mortgage Co. and H&R Block Inc. unit Option One Mortgage Corp. Merrill Lynch & Co. Inc. said on Jan. 2 that it completed its acquisition of First Franklin Financial Cos. Inc., another leading subprime lender, effective Dec. 30.

If Ownit's bankruptcy petition is any indication, repurchases are the main culprit behind the subprime industry's financial woes. Of the creditors holding Ownit's 20 largest unsecured claims, 12 listed repurchase requests as the nature of their claim. Merrill Lynch unit Merrill Lynch LP Holdings Inc. is Ownit's largest creditor, with claims totaling just under $93 million. Terwin Advisors LLC, a company said to be engaged in the acquisition of prime, subprime and underperforming residential mortgage loans, as well as seasoned performing mortgages, was a distant second, with claims of $19 million. Affiliates of Credit Suisse Group, JPMorgan Chase & Co. and Countrywide Financial Corp. rounded out the top five, all listing repurchase requests as the nature of their claims.

Article
Related Content