MOUNTLAKE TERRACE – The shutdown of wholesale lender Mortgage Investment Lending Associates Inc. was sudden, but not a surprise to many of the employees laid off over the past year.
“I’ve been waiting for it. Mortgage companies are declining right now. They’re all having problems,” said Amorita Simon of Everett, who lost her job there in February 2006. “And I knew the way that MILA ran itself, it was only a matter of time.”
Having shed hundreds of employees over the past year, MILA’s leadership left behind many bitter former employees. Simon, for one, said she felt bad for her friends affected by the company’s demise, but she has no sympathy for Layne Sapp, its founder and chief executive officer.
Some ex-employees who e-mailed and called The Herald on Tuesday said MILA was the worst company for which they’ve worked. Others defended the company.
Kris Huston of Stanwood said she enjoyed many of her eight years with the company before she was laid off last year. The former funding manager for MILA said she didn’t see signs of improper lending practices, as some ex-employees have alleged.
“At the time, I thought they were on the up and up,” Huston said.
That was the impression left with David Donhoff, principal owner of No Bull Financial in Woodinville. The retail mortgage broker worked with MILA loan products and knew people working for the company.
“While nobody is spotless, they came as close as anybody,” said Donhoff. “(Layne) ran a really clean ship,” Donhoff said.
Former MILA employee Mary Linares of Marysville said that wasn’t what she saw.
“MILA had no integrity about the type of product it was pushing on to its investors,” she said.
Launched in 1984, when Sapp was just out of high school, Mountlake Terrace-based MILA grew into one of the nation’s 20 largest subprime mortgage lenders over the next two decades. It employed about 700 people at its peak and handled billions of dollars in loans.
MILA’s main focus was the subprime market. It provided funds for retail mortgage brokers to lend to prospective homebuyers who had trouble qualifying for standard mortgages because of unfavorable credit records. MILA then bundled the loans and sold them to Wall Street investors.
Dozens of companies backing similar mortgages have gone out of business in recent months as foreclosure rates have increased.
Last summer, according to National Mortgage News, rumors flared that some of the company’s investors demanded MILA buy back bundled mortgages that weren’t doing well. Sapp told the publication at the time it was receiving buyback requests, but he said the company could handle them.
But business had shrunk dramatically. The trade publication’s quarterly report for late 2006 showed MILA originated $453 million in mortgages through brokers, down 61 percent from mid-2003.
Former employees said the number of loans they processed dropped dramatically toward the end. And Deb Bortner, director of consumer services for the Washington state Department of Financial Institutions, said MILA had only five mortgages in the pipeline when the firm closed on Friday.
“They were aware for quite some time that they were winding down,” Bortner said.
Still, MILA’s remaining 300 employees received an e-mail stating their jobs were gone Friday afternoon only 15 minutes before they had to clear out of the headquarters building.
State regulators say they’ve seen no evidence of any improper conduct at MILA, and because of its middleman role in the industry, no consumers should be left in a lurch, Bortner said.
“They have the normal number of complaints that a company that type and size would have,” she said. But MILA wasn’t on the agency’s watch list as a problem company.
Sapp, who was seen at the company’s headquarters Tuesday, has not returned multiple messages left at his office and home since Friday.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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