WASHINGTON – A federal bankruptcy judge has approved Lehman Brothers Holdings Inc.’s settlement with Fannie Mae, allowing the mortgage finance giant to recover about $537 million for its claim against the estate of the failed Wall Street bank over soured mortgage securities.
Judge James Peck made the ruling Wednesday. The settlement values at about $2.15 billion Fannie’s claim over home loans and mortgage securities it bought from Lehman before the financial crisis. Under rules of Lehman’s bankruptcy proceeding, Washington-based Fannie will receive about 25 per cent of that.
Fannie and sibling Freddie Mac were rescued by the government in a $187 billion bailout in 2008 after they were hit by massive losses on high-risk mortgages.
Lehman’s bankruptcy in September 2008 was the biggest in U.S. history and helped set off the financial crisis.