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Mortgage lender files Chapter 11

February 06, 2007|From Reuters

Mortgage Lenders Network USA Inc. filed for Chapter 11 bankruptcy protection Monday, becoming one of the largest casualties among so-called sub-prime lenders as the U.S. housing market slows.

The Middletown, Conn.-based company, which had been the 15th-largest U.S. sub-prime lender, filed for protection from creditors with the U.S. Bankruptcy Court in Wilmington, Del.

It listed more than $100 million of assets and debts and in excess of 5,000 creditors, court papers show.

Sub-prime lenders make loans to borrowers with imperfect or poor credit histories. They are suffering as home sales and prices slump while delinquencies and other defaults rise.

The filing suggests that Mortgage Lenders' attempts to find a suitor had broken down.

On Jan. 2, Mortgage Lenders had said it was in "strategic negotiations" with several Wall Street firms about its loan operations.

Mortgage Lenders at the time also said it had stopped funding loans and accepting loan applications and temporarily laid off about 80% of its 1,800 employees.

In December, Ownit Mortgage Solutions Inc., the 16th-largest mortgage lender, also filed for Chapter 11 protection. The company is based in Agoura Hills.

Mortgage Lenders made $3.31 billion worth of sub-prime loans in the third quarter of 2006, according to National Mortgage News.

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