Mortgage Lenders objects to Sovereign Bank's request to extend deadline for disputing losses, paying fee

By Jennifer Lanning Drey

Portland, Ore., June 8 - Mortgage Lenders Network USA, Inc. objected to a motion filed by Sovereign Bank seeking to indefinitely extend the deadlines by which it can file a disputed losses pleading under the previously approved loan servicing agreement termination order, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

Sovereign also asked the court to extend the deadline by which it must pay Mortgage Lenders the remaining fee that is not subjected to the disputed losses.

As previously reported, under a stipulation allowing Mortgage Lenders to terminate its serving agreement with Sovereign, Sovereign was ordered to pay Mortgage Lenders a $1.05 million termination fee, with $878,500 to be paid within three business days of the stipulation approval and the rest to be paid by April 19.

Sovereign also had until April 19 to audit transferred loans to find out if any loss to the loans was the result of improper servicing by Mortgage Lenders.

According to Mortgage Lenders' objection to Sovereign's request for an extension, Sovereign previously told the court it is entitled to an indefinite extension of the termination order deadlines because it has not been provided with loan data held by Fidelity.

However, Mortgage Lenders said Sovereign knew Fidelity is a third party in the matter and that Mortgage Lenders could not exercise any control over Fidelity.

Mortgage Lenders also said in its objection that Sovereign knew Mortgage Lenders did not have the additional loan data it sought, and yet expressly agreed to the deadlines established in the termination order.

Mortgage Lenders said it has cooperated with Sovereign and tried to obtain the data from Fidelity.

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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