The Connecticut Banking Department issued a temporary cease-and-desist order against Mortgage Lenders Network USA Inc. of Middletown, Conn., for failing to fund loans to more than 1,400 borrowers.
Connecticut Banking Commissioner Howard F. Pitkin, said last week that MLN also imposed excessive finance charges on borrowers and did not provide information to state regulators.
The order was issued a week after Mortgage Lenders said it struck a deal with Lehman Brothers to take over about a third of its closed but unfunded loans.
"Time was given to the company to complete a deal to fund the loans," Mr. Pitkin said in a press release. "As a result, nearly 400 of the outstanding loans were funded nationally."
MLN has 14 days to request a hearing and faces up to $7 million of fines, he said.
Several states, including New York, Pennsylvania, and Michigan, are trying to resolve concerns by consumers whose loans were unfunded last month, when MLN closed its wholesale division.
Mitch Heffernan, MLN's chief executive officer, said in a press release that his company continues to work with regulators "to resolve all outstanding consumer concerns."
