Mortgage Daily Logo
mortgage news from industry experts

Funding For MLN Loans

Funding For MLN LoansLehman may fund some closed loans

January 10, 2007


Brokers and borrowers who were left hanging when Mortgage Lenders Network’s shut down its wholesale operation may still have a chance to fund their loans.

Closed but unfunded loans will finally receive funding but only after going through a multi-step process that places a series of requirements on its wholesale brokers, their settlement agents and on borrowers themselves.

The process starts with due diligence by Lehman Brothers and continues with broker confirmation that borrowers wish to proceed with the loans.

Next, MLN, through its own contact with borrowers, will reconfirm that borrowers “have not rescinded the loan and still want the loan to fund on its original terms,” according to a notice communicated to MLN’s wholesale brokers and obtained by

“Our Regional Production Centers will be contacting you to help clear exceptions, if any appear on your loans,” the notice tells brokers.

Settlement agents will then be contacted by MLN and they will have to meet a series of requirements, including providing updated closing figures, updated HUD-1s, new closing protection letters and signed supplemental closing instruction letters on forms to be supplied by MLN.

“While you are helping us coordinate with the borrower and the settlement agents,” brokers are further told, “we will be working with our document custodians, warehouse lenders and Lehman to ensure an orderly funding and transfer and sale process.”

Funding will come from the sale of the loans to Lehman Brothers, under terms of an agreement with Lehman Brothers Bank, the notice explains. Fundings are expected to begin this week, it said.

The loans are currently receiving pre-closing and pre-purchase due diligence from Lehman Brothers and its diligence team, the notice pointed out.

“This arrangement does not include an agreement by Lehman with respect to wholesale loans that have been approved by MLN but have not yet closed,” brokers were warned. “MLN will keep you appraised of the status of this pipeline as it develops.”

It was not clear, and MLN officials have not made themselves available to answer questions from brokers as well as from the media, whether this arrangement includes only subprime loans, only prime loans, or both.

Brokers who do prime loans as well as those specializing in subprime have been impacted by MLN’s funding problems, has been told by brokers.

“It’s just a nightmare, an absolute nightmare. And it’s not just subprime, it’s also A paper,” said an East Coast broker, who has half a dozen already-approved prime loans awaiting closings or fundings, some with rate locks that were approved by MLN.

“I have unhappy customers and I have no answers to give them, except to tell them we’re getting no answers from the corporate staff at MLN,” he added, noting that his loans have been in limbo for as long as nearly a month.


MLN Dumps Brokers
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.

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

e-mail Jerry at

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts