Regulators ordered Mortgage Lenders Network USA Inc., which makes home loans to people with poor credit, to shutter its loan-origination business in nine states, the company said in court papers.
The shutdown orders, issued last month, led the Middletown, Conn., company to seek protection from creditors Monday in the U.S. Bankruptcy Court for Delaware, Mortgage Lenders said Tuesday in a court filing. "These events in late January 2007 effectively foreclosed any possibility for the debtor to salvage its loan origination business," the company's chief restructuring officer, Daniel Scouler, said in an affidavit.
Mortgage Lenders is one of at least five subprime lenders to shutter operations because of a slowing housing market and rising delinquencies.
