Mortgage Lenders Network USA stops funding new loans

NEW YORK --Mortgage Lenders Network USA, a major issuer of loans to people with blemished credit histories, says it has stopped funding loans and accepting applications for new loans.

MLN, which bills itself as one of the country's top subprime mortgage lenders, also is "currently exploring strategic alternatives" for its wholesale business lines, according to telephone recordings at at least two of its wholesale lending offices.

MLN, based in Middletown, Conn., says its goal last year was to produce more than $12.1 billion in loans, 80 percent of which would be in the subprime space. The company has four regional wholesale lending offices.

MLN's outside public relations representatives referred inquiries to company executives. MLN officials, including the chief executive and general counsel, didn't respond to phone calls or e-mails. On Dec. 8, the company posted a note on its Web site saying it continued to operate normally.

MLN also has a big mortgage servicing arm, with a portfolio of more than $14 billion and over 100,000 accounts, according to the company's Web site. The status of the servicing business wasn't clear.

The decision by MLN to stop funding new loans, and to consider alternatives for its wholesale business, is the latest sign of an ongoing shakeout in the subprime mortgage industry. Late last year, for example, two subprime lenders, including Ownit Mortgage Solutions, shut down citing "the current unfavorable conditions of the mortgage industry."

Some subprime issuers are facing liquidity problems as their so-called warehouse lenders withdraw credit lines. Among MLN's warehouse lenders is GMAC's residential-mortgage arm, ResCap. In mid-December, a ResCap spokesman said that "We have a relationship with MLN which includes purchases of loans and warehousing. We continue to support MLN through these programs."

Stephen Dupont, the ResCap spokesman, declined to comment on the latest developments at MLN.