Doral: Fannie Mae to withdraw $22.99 million claim under settlement

By Caroline Salls

Pittsburgh, March 21 – Doral Financial Corp. and its official committee of unsecured creditors requested court approval to enter into a settlement with Federal National Mortgage Association (Fannie Mae), according to a motion filed Monday with the U.S. Bankruptcy Court for the Southern District of New York.

Doral and Fannie Mae are parties to a mortgage selling and servicing contract under which the company can sell mortgage loans to Fannie Mae. In 2007, Doral transferred to Doral Banks the servicing rights associated with some of the mortgage loans sold to Fannie Mae.

In January 2006, Doral entered into an agreement under which it pledged $44 million of cash and negotiable debt securities as collateral to secure its obligations arising under some contracts.

In July 2015, Fannie Mae filed a $22.99 million claim against Doral, including $22.98 million for “recourse obligations on more than 8,800 recourse loans that require [the debtor] to purchase and/or pay losses incurred on the recourse loans” that are secured by the collateral.

Doral said the settlement provides for the release of $13.95 million from the account to Fannie Mae with the remaining $30.05 million in the account to be released to the company.

Doral will also receive $1 million held in a collateral interest payment account.

Also under the settlement, the entire contractual relationship between the company and Fannie Mae will be terminated, and Fannie Mae’s claim will be withdrawn.

A hearing is scheduled for April 13.

Doral is a holding company based in San Juan, Puerto Rico. The company filed for bankruptcy on March 11, 2015 under Chapter 11 case number 15-10573.

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