MLN Goes Belly Up
Mortgage Lenders Network here, a $17 billion servicer of mostly subprime loans, filed for bankruptcy protection in early February, owing unsecured creditors $92 million.
As Mortgage Servicing News went to press, the company was in the process of trimming its servicing workforce and questions remained about how investors would react to the filing.
In late January, while MLN's finances worsened, the privately held company scuttled a deal to sell $3 billion in servicing on Fannie Mae loans. Fannie Mae, meanwhile, may transfer its servicing to a third party, according to industry sources. (Fannie declined to comment.)
Residential Funding Co., a unit of GMAC, recently told MLN it was terminating its right to service loans for RFC.
MLN officials have yet to comment on the bankruptcy filing which came shortly after National Mortgage News reported that Marathon Asset Management, New York, a potential investor, had pulled out of talks with the company.
Marathon was MLN's last real hope, officials close to the lender said.
Hurt by delinquencies and buyback requests, the mortgage banker left behind several unsecured creditors including Merrill Lynch, which had provided warehouse financing to the non-depository.
Merrill - which reportedly had asked MLN to buy back bad loans - is owed $32.6 million, according to court documents. Other large creditors include IXIS Real Estate ($25 million) and Lehman Brothers ($9.9 million), among several others.
In January, Lehman Brothers stepped in to fund about 300 MLN loans, which had been approved but remained unfunded when the company shuttered its wholesale network in late December. Lehman, too, was rumored to be a possible investor in MLN but eventually passed. Wholesale accounted for about 90% of its fundings. MLN has a capital markets group called Emax Financial, which is based in the Virgin Islands. Back in the fall MLN employed about 1,800. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com