Lehman Seeks Approval of $2.15 Billion Fannie Mae Settlement
Lehman Brothers Holdings Inc. asked a bankruptcy court to approve a $2.15 billion settlement that would resolve an $18.9 billion claim filed against the defunct bank by Fannie Mae.
The administrator under Lehman’s reorganization plan filed a motion Thursday asking U.S. Bankruptcy Judge James M. Peck in Manhattan to sign off on the agreement among Lehman, Aurora Commercial Corp., Aurora Loan Services and Fannie Mae.
Fannie Mae had brought claims against New York-based Lehman over mortgages the bank packaged and sold. The administrator said in court papers that the agreement resolves one of the “single largest remaining claims” against the Lehman parent.
The settlement requires Washington-based Fannie Mae to provide documents and information that will allow the administrator to pursue claims against third-party mortgage originators and sellers for breaches of representations and warranties made to Lehman, according to a court filing.
“The plan administrator expects to obtain substantial recoveries in connection with these claims, which will serve to offset a portion of the amounts that are paid to Fannie Mae,” the administrator said in the filing.
Fannie Mae had agreed that the reserve for its claim would be $5 billion in connection with the reorganization plan approved in December 2011.
The bankruptcy court had already approved a settlement of a guarantee claim for $110 million.
Lehman filed for bankruptcy in September 2008, and a Chapter 11 plan for units other than its brokerage was implemented in March 2012.