American home mortgage liquidating trust
Manhattan court bankruptcy Judge James Peck, after a seven-hour hearing, ruled: "I have to approve this transaction because it is the only available transaction.Lehman Brothers became a victim, in effect the only true icon to fall in a tsunami that has befallen the credit markets.The filing for Chapter 11 bankruptcy protection by financial services firm Lehman Brothers on September 15, 2008, remains the largest bankruptcy filing in U. history, with Lehman holding over US0,000,000,000 in assets.The bank had become so deeply involved in mortgage origination that it had effectively become a real estate hedge fund disguised as an investment bank.Lehman was one of the first Wall Street firms to move into the business of mortgage origination.In 1997, Lehman bought Colorado-based lender Aurora Loan Services, an Alt-A lender.Lehman borrowed significant amounts to fund its investing in the years leading to its bankruptcy in 2008, a process known as leveraging or gearing.A significant portion of this investment was in housing-related assets, making it vulnerable to a downturn in that market.
Lehman quickly became a force in the subprime market.(This drop was subsequently exceeded by an even larger −7.0% plunge on September 29, 2008.) Lehman's bankruptcy was expected to cause some depreciation in the price of commercial real estate.The prospect for Lehman's .3 billion in mortgage securities getting liquidated sparked a selloff in the commercial mortgage-backed securities (CMBS) market.One measure of this risk-taking was its leverage ratio, a measure of the ratio of assets to owners equity, which increased from approximately 24:1 in 2003 to 31:1 by 2007.In August 2007, Lehman closed its subprime lender, BNC Mortgage, eliminating 1,200 positions in 23 locations, and took a -million after-tax charge and a -million reduction in goodwill.