Lehman Brothers sues Fairway Independent over repurchase agreement

Lehman Brothers Holdings is suing Fairway Independent Mortgage Corp. alleging the Wisconsin mortgage bank misrepresented borrower debt in loans the now-defunct investment bank acquired. Lehman is also alleging that Fairway now won’t buy back the bad debt. Lehman bought several mortgage loans from Fairway that the holding company feels had “material problems,” such as misrepresentations of a borrower’s debt. According to the complaint, “this was a material breach of Fairway’s representations, warranties and covenants” outlined in a seller’s guide, according to Wisconsin Western District Court documents procured by HousingWire. The cited seller’s guide also said that in the event of a breach of contractual agreement, Lehman has the right to demand a repurchase of the questioned loans. Fairway refused to repurchase the mortgage loans it sold to Lehman, according to the complaint. This is just one of the cases Lehman Brothers is bringing against banks it worked with before going bankrupt in 2008. Last week, Lehman sued Nationsfirst Lending Inc. for failing to honor repurchase contracts on faulty mortgage loans. The holding company also sued Canadian Imperial Bank of Commerce in September to recover more than $3 billion it lost in its bankruptcy filing. Fairway Independent is a based in Sun Prairie, Wis. and did not return requests for comment on the case. Write to Christine Ricciardi.