MLN Screwed Up on Jumbo Loan

The troubled Mortgage Lenders Network made a huge mistake on a jumbo loan product that was priced 60 to 75 basis points under the going Fannie Mae rate, industry sources have told MortgageWire.At MW's deadline time, MLN would not comment on the matter. Meanwhile, according to news reports, the nondepository -- which shuttered 90% of its production in late December -- has worked out a deal whereby Lehman Brothers will take over about 900 MLN loans that closed but did not fund because of the lender's financial woes. (Lehman, though, declined to confirm this number.) One source familiar with MLN's "conventional" jumbo mortgage said the loan was introduced as a promotion last year. The loan amount was for a minimum of $500,000, requiring FICO scores of at least 690 and a three-year prepayment penalty. The source said there was "tremendous response" to the loan and that MLN had taken in applications of close to $1 billion -- though this was not the amount the company funded. The source said it was "crazy" that MLN would price the loan below the Fannie Mae rate. MLN chief executive Mitch Heffernan was also a top executive at ContiMortgage, a now-defunct subprime lender.