New Century Finance, one of the largest subprime mortgage lenders in the country, has filed for chapter 11 protection. The company has ceased residential loan production and has closed its website. It had been a part of the Network since 2000, but it recently announced it would file for Chapter 11. The company had laid off about 3200 employees and stopped making new loans. The site was still live, but it has since been shut down.
The company has suspended funding through outside brokers due to pending bank issues, but officials declined to elaborate on those issues. The company does have active warehouse lines of credit, which are an important source of funding. While officials have declined to reveal the nature of the issues, speculation abounds that the banks demanded increased collateral and mispriced large chunks of loans. The collapse of the subprime mortgage industry has led to widespread failures of lenders like Mortgage Lenders Network.
In the wake of the financial meltdown, several subprime lenders have filed for bankruptcy. Mortgage Lenders Network USA, Inc. is one of them. The company has two locations in Connecticut and California. The company made loans to people with bad credit, and has more than $100 million in debt. It is reportedly hiring financial restructuring firms to help them get back on their feet. It has been unsuccessful in negotiating with Wall Street firms, but will likely survive.
Mortgage Lenders Network USA Files For Chapter 11
As part of the restructuring plan, the lender will cease operations and transfer its assets to an outside party. In addition, the company’s customers will continue to receive payments. In the end, the company will be liquidated in the bankruptcy filing. But before a final decision on whether or not Mortgage Lenders Network USA is liquidated, investors should be aware of the company’s history. Besides the potential for closure, the network has made an impact on the industry.
The company has a large inventory of subprime loans and two headquarters in Connecticut. The firm is the 15th largest subprime lender in the U.S., according to the Wall Street Journal. Its subsidiaries are headquartered in Connecticut, Georgia, and New York. The Middletown company was a member of the National Association of Mortgage Lenders. It has more than one million customers and 5,000 creditors.
The bankruptcy filing is a result of a restructuring that occurred in the middle of last year. The company’s employees had more than 2,000 employees in September and laid off more than eighty percent of their workforce late last year. Among its major assets are loans to borrowers in California, Oregon, and the District of Columbia. Its assets totaled more than $100 million, which is the largest in the country. The firm’s chief restructuring officer, David S. Murphy, is an attorney and a real estate agent.
