ResCap’s GMAC-RFC said late Friday that it will transfer subservicing of loans currently being subserviced by troubled lender Mortgage Lenders Network USA, Inc. to Wells Fargo Home Mortgage, effective March 1. On January 29, Housing Wire reported that RFC had delivered notices terminating the servicing rights of Emax Financial Group, LLC and the subservicing rights of MLN with respect to loans serviced for RFC or its securitization trusts. MLN was one of the first lenders to fold in the now-widespread subprime credit crunch, announcing on January 3 that it had ceased wholesale lending operations. Subsequently, the company filed for bankruptcy protection in a move industry insiders say was done to avoid paying on a margin call by warehouse credit provider Merrill Lynch.
The bankruptcies at MLN and Ownit Mortgage Capital, another Merrill-funded operation, helped in part to fuel the Wall Street bank’s decision to retrench its position in the subprime market — a move that has helped contribute to the volatility now being felt in both the subprime and Alt-A credit sectors. GMAC-RFC is a subsidiary of Residential Capital, LLC, which also owns GMAC Mortgage, ditech.com, and Homecomings Financial. For more information, visit http://www.rescapholdings.com.
