Mortgage Lenders granted approval to sell loans, interim access to $3 million DIP

By Caroline Salls

Pittsburgh, Feb. 8 - Mortgage Lenders Network USA, Inc. obtained interim court approval of its $3 million debtor-in-possession financing from Residential Funding Co., LLC and obtained court approval to sell closed loans that have been funded, according to Wednesday filings with the U.S. Bankruptcy Court for the District of Delaware.

Under the loan sale motion, the company also received court approval to honor loan commitments on which it closed before the bankruptcy filing but was unable to fund.

As previously reported, the company experienced multiple crises in its loan origination business over the past two months, which left it unable to obtain the funding necessary to originate loans and left it responsible for multiple loan commitments it had closed but could not fund.

As a result, the company said these loans must be sold in order to honor its funding commitments.

According to the DIP motion, the DIP will mature on the earlier of April 28 or upon an event of default.

Interest will be Libor plus 400 basis points, and the DIP will be subject to availability of up to $3 million.

Mortgage Lenders Network will pay a $50,000 commitment fee.

Proceeds will be used in accordance with a budget.

The final DIP hearing is scheduled for Feb. 28.

Mortgage Lenders Network, a Middletown, Conn.-based lending company, filed for bankruptcy on Feb. 5. Its Chapter 11 case number is 07-10146.

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