Order Issued Against MLN

The Connecticut Department of Banking Division issued the order, which was coordinated by the New England states, New York, Pennsylvania and Michigan, as a result of an ongoing investigation into the possible violations of Connecticut General Statutes by MLN, according to an announcement.

The order states MLN may face fines of $100,000 per violation or a maximum civil penalty of $7.6 million.

“This order comes after days of negotiation between eight states and the company in an attempt to have MLN fund as many outstanding loans as possible,” State Banking Commissioner Howard J. Pitkin said in an announcement. “My primary responsibility is the protection of the citizens of Connecticut, therefore; 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.“

The division’s action was “not a surprise,” MLN told MortgageDaily.com in an e-mail statement.

“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 so that the company will be able to move forward with its business,” Mitch Heffernan, MLN chief executive, said in the statement.

The Middletown, Conn.-based lender, which on Jan. 2 announced that it had stopped funding wholesale loans, issued an e-mail to its employees last Friday, informing that the company was “working on a multi-party arrangement that will allow MLN to continue to operate all of its divisions, including wholesale, and recall some employees who were furloughed.”

Among the reasons the department cited for its order, was that, during the period from Dec. 21, 2006, to Jan. 3, 2007, MLN failed to timely disburse loan proceeds in at least 75 first mortgages and 18 second mortgages for Connecticut properties, and failed to close on commitments it issued for at least 23 first or secondary mortgages.

Additionally, MLN did not timely disburse proceeds for 1,409 mortgages outside the state made from last July to Jan. 2, 2007, employed or retained at least 40 unregistered originators, and imposed prepaid finance charges, in connection with the refinancing of five loans, that exceeded the greater of 5 percent of the original loan principal amount or $2,000, the department said.

The department also cited MLN’s failure to provide information requested by the department as an opportunity for MLN to show compliance for the retention of its first and secondary mortgage lender/broker licenses. The information the department requested included a written statement from each of MLN’s warehouse lenders detailing the current position regarding its contractual relationship with MLN.