MOUNTLAKE TERRACE – Mortgage Investment Lending Associates has filed for bankruptcy protection, starting another chapter for a company that made a name for itself in the subprime mortgage industry before abruptly shutting down.
In its Chapter 11 filing in U.S. Bankruptcy Court in Seattle, the wholesale mortgage firm claims liabilities totaling nearly $175 million, versus assets of about $7.9 million.
The creditors owed by the company, known to most simply as MILA, include some of the world’s largest banks.
After the remaining 300 employees of the company lost their jobs in mid-April, founder Layne Sapp said he was trying to find a buyer for the Mountlake Terrace-based business he founded 23 years ago.
“Right now, we’re actively seeking a partner who’s interested in buying the assets of the company and rehiring the employees back,” Sapp told The Herald at the time.
He had reason for hope, he said. Just days before the layoffs and closures, representatives of a potential buyer had checked out the business, but the deal never happened.
Sapp, in an e-mail Tuesday, said he had no further comment right now about the bankruptcy filing.
His attorney, James Day, said he and his client still hope that the business can be sold.
“There will be a trustee appointed to do just that,” Day said. But they don’t want a “slash and burn” sale, which is one reason the business filed for Chapter 11 reorganization instead of Chapter 7 bankruptcy, which usually results in the liquidation of assets.
MILA grew along with the nation’s housing boom, helped greatly by its own online loan management system that approved and closed mortgages for clients much more quickly than competitors did.
At the height of MILA’s business, its 700 employees occupied most of two buildings that Sapp owned in Mountlake Terrace and Lynnwood. The company funded at least $4.5 billion in mortgage loans during 2005, putting it among the top 30 subprime lenders nationwide.
But the mortgage industry, especially the subprime sector, has been hit in the past two years by a combination of falling home sales and property values in many parts of the country and aggressive lending on the part of major lenders. Dozens of subprime lenders have gone out of business or filed for bankruptcy.
Even as it tried to move into more conventional mortgage lending, MILA’s business slowed down. When nervous creditors repeatedly asked Sapp to pay down MILA’s lines of credit, he finally decided to shut down.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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