Middletown-based Mortgage Lenders Network – the subprime lending company that closed down its wholesale business earlier this month and furloughed 880 of its 1,900 employees – is working on a multiparty arrangement that will allow the company to resume operations of its wholesale lending division and recall some employees, according to a message to employees obtained by The Commercial Record.

The e-mail message, sent to the employees last Friday, said some might resume working this week, but the company had not made an announcement by press time.

Despite the recent difficulties of subprime lenders across the country, it was not subprime loans that prompted Middletown-based Mortgage Lenders Network to shut down its wholesale lending division and furlough the employees.

The company’s president last week told American Banker that the company mispriced its A++ loans last year. Mitchell Heffernan told the publication that the suffering mortgage market compounded its problems when warehouse lenders started marking down its loans, and not just the $600 million worth of loans it mispriced.

‘Upside Down’

The American Banker story, which MLN posted on its own Web site, said that those wholesale lenders forced MLN to close its wholesale lending division, which accounted for 90 percent of its volume. MLN’s executives did not grant requests for an interview with The Commercial Record earlier this week.

“The product was upside down and we didn’t see ourselves pulling out of this quickly,” Heffernan told American Banker. “When you’re doing $2 billion of business and taking a 2 percent [cut], you have a lot of cash going out the door.”

Reports continue to say that New York City-based Lehman Bros., a global financial services firm, will fund loans that were promised to borrowers, but not delivered after MLN’s warehouse financing dried up. There also have been reports that Lehman Bros. would buy the wholesale lending division.

MLN has been building a state-of-the-art, 305,000-square-foot facility in Wallingford and had hoped to bring 1,000 new jobs to the state. Executives said earlier this month that the project had not experienced a “change in direction.”