Lehman Bros. sues Nationsfirst Lending
Lehman Bros., the storied investment bank that failed in 2008 while holding piles of bad real estate loans, has filed suit against an Irvine mortgage company for allegedly misrepresenting the strength of loans it sold to the Wall Street firm.
The lawsuit, filed Monday in federal court in Los Angeles, alleges that Nationsfirst Lending Inc. misrepresented the identities of borrowers, the value and condition of property securing the loans and the validity of loan documents.
Officials with Nationsfirst, listed as a suspended corporation on the California secretary of state’s website, could not be reached for comment. The company sold Lehman an unspecified number of loans from 2004 to 2007, the lawsuit said.
Lehman alleges that “straw buyers,” who never intended to occupy the homes, were used in two of the Nationsfirst loans and that a loan officer received a “kickback” for making the loans.
Lehman Brothers Holdings Inc., operating under the leadership of an outside firm trying to recoup assets on behalf of creditors, is in the midst of the largest corporate bankruptcy in U.S. history. The lawsuit against Nationsfirst is one of several suits that Lehman Bros. has filed against mortgage companies alleging they misstated the strength of loans and creditworthiness of borrowers. It has also filed lawsuits against California Financial Group Inc. of Port Orchard, Wash.; First Guaranty Financial Corp. of Santa Ana; Colony Mortgage Lenders Inc. of Glendale; Mountain West Financial Inc. of Redlands; and other lenders.
Once the country’s fourth-largest investment bank with more than $600 billion in assets, Lehman filed for bankruptcy Sept. 15, 2008, a significant trigger in the worldwide meltdown of the financial markets.
