Lehman asks court to approve mortgage loan deal for Miami Beach condo

By Jennifer Lanning Drey

Portland, Ore., May 15 - Lehman Brothers Holdings Inc. requested court approval to enter into a mortgage loan purchase agreement with Americor Mortgage, Inc. to increase its chances of being paid back loans made to a Florida developer, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

Under the terms of the agreement, Americor would provide residential mortgage loans to people looking to purchase condominium units in a Miami Beach, Fla., condominium building that was built with $522 million of loans from Lehman and its non-debtor subsidiary LB Carillon Construction LLC.

In exchange, Lehman would agree to purchase the loans from Americor.

Lehman estimates that during the life of the mortgage program, it may purchase between $100 million and $200 million worth of loans under the agreement, according to the filing.

Lehman said the increased availability of financing to potential purchasers would increase the likelihood that sale proceeds of the condominium units would be available for repayment to LB Carillon's senior secured construction loans, which would in turn increase the likelihood that sale proceeds will be available for repayment of Lehman's subordinated mezzanine loan.

Since the building was completed in 2008, only 209 of the 580 condominium units have been sold, according to the filing.

Potential purchasers have entered into purchase contracts for an additional 193 condominium units but have been unable to close on their contracts to due the difficulty and expense of securing mortgages for residential condominiums in south Florida, Lehman said.

Loan pay-offs

Lehman also requested court approval Thursday of a separate loan pay-off agreement related to loans used to finance the construction and development of two New York City buildings.

The borrowers under four loans provided by Lehman to finance the construction of the buildings have defaulted under their respective loans.

At the same time, Lehman is engaged in disputes related to the ownership status of two of the loans and whether another of the loans constitutes one or two assets.

Due to the defaults on the loans and Lehman's inability to resolve the disputes with lender parties, the company believes it is in the best interest of its estates to enter into loan pay-off agreements.

Under the agreement, the borrower of the mortgage loan on the first building will repay its indebtedness and a discount and Lehman Re, Ltd. will be entitled to the proceeds.

Lehman will release the borrower under the related mezzanine loan from its payment obligations, and Lehman will be released from claims that the borrower had against Lehman.

The borrower on the senior mezzanine loan on the second building will also repay its indebtedness at a discount.

A hearing on both motions is scheduled for June 3.

New York-based Lehman Brothers Holdings was the fourth-largest investment bank in the United States. The company filed for bankruptcy on Sept. 15, 2008. Its Chapter 11 case number is 08-13555.

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