It is interesting to note that even with a name like ‘Mortgage Lenders Network USA’ the legal action described below is again taking place at the state level, not the federal level. That’s the same thing we saw with the Ameriquest settlement and Household International’s settlement. Where is the OCC in all of this? Some analysts say lack of federal regulation and oversight caused the subprime mess to begin with. Mortgage lenders like it that way, as it is much more difficult to coordinate between many states.
Failed subprime operator Mortgage Lenders Network USA Inc. has reached settlements with regulators in four states that had ordered the company out of the lending business and threatened it with millions of dollars in fines. Mortgage Lenders laid off most of its employees, sold about $400 million worth of home loans and transferred its $12 billion loan servicing portfolio. It has until Jan. 2 to file a Chapter 11 plan setting out how it will distribute cash to creditors.
Connecticut threatened to fine the company up to $7.6 million for a series of alleged wrongdoing, from failing to fund loans to failing to register some of its loan-making employees, according to documents on file at the Connecticut Department of Banking.
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