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Lehman RMBS bondholders - $100+ million in expenses coming your way

Lehman Brothers Holdings, Inc., Bankruptcy Case No.: 08-13555 (SCC)

...pending in the United States Bankruptcy Court for the Southern District of New York

For the past 5 ½ years, RMBS Trustees have been unsuccessful at getting the Lehman estate to resolve claims related to rep and warranty breaches. At the end of 2014, the Bankruptcy Court approved a protocol that provides for loan level file review on all Lehman covered loans. The RMBS trustees have a 15-month timeline to review around 200,000 loans, which is one mighty challenge. The RMBS Trustees are obligated to provide loan-level proof of their claims pursuant to the repurchase clauses in the Governing Agreements. The RMBS Protocol creates a clear and consistent process that will facilitate the resolution of the RMBS Trustees’ Claims in an expeditious manner. In order to fulfill the Protocol, Non-Agency RMBS investors across 255 trusts must spend $100+ million over the next 15 months to review 200,000 loans in hopes of recovering $5 billion to $12.143 billion.

It is a fascinating timeline of events. The motions and orders are worth reviewing, which we summarize in today’s commentary.

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