Conn. seeks fine against mortgage lender

Conn. seeks fine against mortgage lender

	Published : Fri, 19 Jan 2007 18:56 By : Agencies Print this Story

HARTFORD, Conn. (AFX) - State banking regulators said Friday they are seeking fines that could exceed $7 million in a multistate effort against a troubled mortgage lender that works primarily with people with poor credit.

The Banking Department issued a temporary cease-and-desist order against Middletown-based Mortgage Lenders Network USA Inc., saying it failed to fund loan transactions in a timely manner, imposed excessive prepaid finance charges and failed to provide information requested by the state.

Friday's order doesn't prevent the company from operating, but Mortgage Lenders has promised not to make loans while the matter is pending, banking officials said. The privately held company bills itself as one of the country's top subprime mortgage lenders, with a portfolio of $17.8 billion.

State Banking Commissioner Howard F. Pitkin said the order was part of an effort by New England states, New York, Pennsylvania and Michigan.

'This order comes after days of negotiation ... in an attempt to have MLN fund as many outstanding loans as possible,' Pitkin said in a statement. 'My primary responsibility is the protection of the citizens of Connecticut. Time was given to the company to complete a deal to fund the loans. As a result, nearly 400 of the outstanding loans were funded nationally.'

Mitch Heffernan, Mortgage Lenders' chief executive officer, said the company was working toward moving forward with the business.

'The issuance of the notices and orders is part of an overall process in which the company and its regulators continue to work together to resolve all outstanding consumer concerns,' he said in a statement Friday.

Mortgage Lenders announced Jan. 5 that it was negotiating possible partnerships to infuse the company with cash.

Regulators began investigating the company earlier this month after Mortgage Lenders halted its wholesale operation, which makes up about 85 percent of its business, and stopped funding loans or accepting new applications. Wholesale mortgage lenders offer loans to brokers at a lower cost than retail brokers who offer mortgages to the general public.

Company officials have blamed Mortgage Lenders' problems on increased defaults and the faltering housing market. Subprime borrowers had a delinquency rate of 12.5 percent in the third quarter of 2006, the highest in more than three years, the Mortgage Bankers Association reported last month.

The company has 14 days to request a hearing before banking regulators.