Lehman mortgage investors settle repurchase claims for 238 trusts

New York, June 1 – Lehman Brothers Holdings Inc.’s plan administrator has made an offer to settle mortgage repurchase claims that has been accepted by 14 institutional investors.

The claims for 238 of the 244 residential mortgage-backed securities issued by Lehman or to which Lehman contributed mortgages have been accepted by the trustees for the various trusts.

One of the remaining trusts has terminated and no claims for breaches of representations and warranties were submitted for the remaining five trusts.

Robert Madden of Gibbs & Bruns LLP, counsel for the institutional investors, said the agreement is, “an important step in finally resolving the Lehman RMBS claims and obtaining value for certificateholders in the trusts.”

Under the settlement, the allowed amount of the mortgage repurchase claims submitted under the existing loan review protocol for covered loans will be determined by the bankruptcy court in an estimation proceeding to commence in October.

The plan administrator and the trustees will each have an opportunity to present evidence.

The plan administrator has agreed to request that the Trusts’ claims on account of covered loans be allowed for an amount of $2,416,000,000, a level agreed to be “fair and reasonable” by the institutional investors.

If the court determines the claims to be in a range of $2 billion to $2,416,000,000 then the administrator will still allow a claim of $2,416,000,000.

In return, the trustees waived their right to appeal as long as the court determines an amount greater than $2 billion.

The plan administrator has also waived its right to appeal.

The trusts will release all their repurchase claims.

The institutional investors involved are Aegon USA Investment Management, LLC, BlackRock Financial Management Inc., Cascade Investment, LLC, Federal Home Loan Bank of Atlanta, Goldman Sachs Asset Management, LP, Invesco Advisers, Inc., Kore Advisors, LP, Metropolitan Life Insurance Co., Pacific Investment Management Co. LLC, Sealink DAC through its investment manager Neuberger Berman Europe Ltd., TCW Group, Inc., Thrivent Financial for Lutherans, Voya Investment Management LLC and Western Asset Management Co.

New York-based Lehman Brothers was the fourth-largest investment bank in the United States. The company emerged from bankruptcy on March 6, 2012.

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