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MLN Dumps Brokers

MLN no longer taking loans

January 2, 2007

By JERRY DeMUTH


A major originator and servicer of Alt-A and subprime mortgages says it has stopped funding loans and accepting applications for new loans at its wholesale units as it seeks a buyer of its wholesale operations.

The company, Middletown., Conn.-based Mortgage Lenders Network USA Inc. is currently involved in "strategic negotiations with several Wall Street firms relative to MLN's wholesale origination platform," according to a spokesperson.

"We're not shutting down," insisted someone in the Middletown., Conn., headquarters of Mortgage Lenders Network USA, Inc. in response to a call from MortgageDaily.com. "We're currently just not funding loans in our wholesale units."

President and CEO Mitchell Heffernan noted that the economics of the wholesale mortgage market industry-wide have deteriorated dramatically over the past two months.

"Until we see credit quality and margins return to acceptable levels," he said, "we have determined that MLN needs to pause from wholesale broker originations."

However, MLN will continue to run its servicing operations and its retail franchises, Heffernan said. MLN has a $17.8 billion servicing portfolio and also is a major subservicer -- "the nation's third largest" -- of nonprime loans, he pointed out.

The company has retail offices in Schaumburg, Ill., and Middletown, Conn., and has five wholesale nonprime regional offices, located in Horsham, Penna.; Alpharetta, Ga.; Oak Brook, Ill.; Rocky Hill, Conn.; and Phoenix, Ariz.

Last September, MLN announced expansion plans for the Phoenix office that would create 650 new high wage jobs over the next three years. It said a new 180,000-square-foot facility would open in fall of 2007. There also were expansions planned for the Pennsylvania and Georgia regional wholesale offices. And there were tentative plans to open a new wholesale office in California, according to one employee.

MLN also has had plans to open new headquarters in 2007 in a newly constructed 305,000-square-foot building in Wallingford, Conn., with 550 new, additional employees, according to company press releases.

"A bunch of growth plans have come to a grinding halt," said one person connected to MLN when contacted by MortgageDaily.com for comment.

Switchboard phones at three of MLN's wholesale offices were not being answered or were, after lengthy ringing, automatically switched to a staff person's voice mail. At some other offices calls were directed to persons with full mail boxes.

Last November, according to someone familiar with MLN's wholesale operations, a MLN official took actions to prevent all fundings of a new Alt-A mortgage product that was priced at a floor rate of 5.3% for a fixed-rate 30-year loan when pricing for a conventional 30-year fixed-rate loan was 6.00 to 6.25%. MLN then raised the floor rate to 6.25% from that initial 5.30%. Eventually some of the loans reportedly were funded at the lower pricing. MLN officials would not comment on the matter.

MLN, which was founded in 1997, has approximately 1,600 employees in 12 wholesale, retail and servicing offices nationwide. Its 2006 production goal, according to its Web site, was more than $12.1 billion in new loans, with approximately 80% in Alt-A and nonprime loans and 20% in conforming product.


Jerry DeMuth is an award winning journalist who has been reporting for four decades.

e-mail Jerry at [email protected]
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