|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Next, MLN, through its own contact with borrowers, will reconfirm that borrowers “have not rescinded the loan and still want the loan to fund on its original terms,” according to a notice communicated to MLN’s wholesale brokers and obtained by MortgageDaily.com.
“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, MortgageDaily.com 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
Jerry DeMuth is an award winning journalist who has been reporting for four decades.
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