Lehman settles with Fannie over mortgage bond sales

by Ryan Smith27 Jan 2014
Lehman Brothers is dead, but that hasn’t stopped its creditors from looting the corpse.

The team in charge of winding down the remnants of the once-mighty bank has reached a settlement resolving Fannie Mae’s $18.9bn claim over mortgage loans and mortgage-backed securities sold to Fannie prior to the financial meltdown, according to a Wall Street Journal report.

Under the terms of the settlement, Fannie would recover about 25 cents on the dollar, or around $537.5 million, the Journal reported.

Lehman, meanwhile, would see about $5bn freed up to pay off its other creditors. Lehman’s holding company has already paid creditors almost $50bn since the bank exited bankruptcy in 2012, and is expected to have paid $80bn before all is said and done, according to the Journal.

Fannie, meanwhile, gets to end its long-running legal battle with the bank.

“Fannie Mae is committed to putting legacy issues behind us so we can focus on building a strong, sustainable housing finance system for the future,” said Bradley Lerman, Fannie's general counsel.

Lehman Brothers collapsed on Sept. 15, 2008. Its failure marked the largest bankruptcy in U.S. history, and played a major role in kickstarting the global financial meltdown.
 

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