ResMAE looks to increase Lehman mortgage origination cap, enter $500 million loan purchase agreement

By Caroline Salls

Pittsburgh, April 16 - ResMAE Mortgage Corp. requested court approval of an agreement that will allow it to increase the amount of loans it can originate under a Lehman loan sale transaction to $800 million from $500 million, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The company is also seeking court approval to enter into an additional loan purchase agreement with DB Structured Products Inc., which will allow it to fund the origination of up to $500 million more in mortgage loans.

Under the agreement, DB will purchase 100% of the principal balance of each mortgage loan sold.

The agreement will terminate on the earliest of June 28, upon termination of a total return swap agreement between DB and RMC Derivatives LLC, upon dismissal or conversion of ResMAE's Chapter 11 case, upon appointment of a Chapter 11 trustee or examiner, or upon an order granting a lien on the loans superior to that of DB Structured Products.

According to the motion, under the original Lehman loan purchase agreement, ResMAE was allowed to engage in up to $500 million in mortgage loan sale transactions, and the company said it is quickly approaching that $500 million loan sale cap.

To address ResMAE's need to fund additional transactions, Lehman has agreed to increase the cap by $300 million.

ResMAE, a mortgage lender based in Brea, Calif., filed for bankruptcy on Jan. 12. Its Chapter 11 case number is 07-10177.

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