Aegis, Bear Stearns settle servicing agreement reimbursement payment dispute

By Caroline Salls

Pittsburgh, Jan. 21 - Aegis Mortgage Corp. requested court approval of a mortgage servicing agreement reimbursement settlement with Bear Stearns Mortgage Capital Corp., Bear Stearns & Co. Inc. and EMC Mortgage Corp., according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the motion, Aegis contracted some of its mortgage loan subservicing duties to Bear Stearns Mortgage Capital to help pay for service advances and delinquency payments.

In exchange for Bear Stearns' agreeing to assume some of Aegis' servicing advance obligations, Bear Stearns was to receive reimbursement payments related to the advances.

However, Aegis said it defaulted on the servicing agreement with the servicing trusts, and the trusts subsequently terminated the Aegis servicing agreement and began to service the loans themselves.

Aegis said the reimbursement payments were being held by the trust until ownership could be determined.

Bear Stearns filed a $9.34 million claim for the reimbursement payments.

In addition, EMC Mortgage filed a $4.48 million claim for amounts allegedly owed by Aegis in connection with mortgage loans purchased under mortgage loan purchase and interim servicing agreements.

Under the settlement, Aegis will keep $1.54 million of the pre-bankruptcy reimbursement payments, and the current servicer will give Aegis 52% of the post-bankruptcy collected reimbursement payments, with the balance going to Bear Stearns.

Aegis said it will also receive 52% of all reimbursement payments related to advances made by Bear Stearns after the settlement is approved, with the balance going to Bear Stearns.

In exchange, Aegis and its official committee of unsecured creditors will waive their rights to contest the perfection of Bear Stearns' interest in the reimbursement payments.

The company said it expects to receive $3.65 million to $3.96 million in connection with the reimbursement payments.

A hearing is scheduled for Feb. 17.

Aegis Mortgage, a Houston-based mortgage production franchise, filed for bankruptcy on Aug. 13, 2007. Its Chapter 11 case number is 07-11119.

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