Lehman completes Aurora Bank asset sale, transfer of insured deposits

By Caroline Salls

Pittsburgh, June 29 - Lehman Brothers Holdings Inc. has completed the sale of substantially all of the assets and transfer of substantially all of the insured deposits of indirectly wholly owned multi-billion dollar subsidiary Aurora Bank, FSB, according to a news release.

The company said this concluded a process under which it successfully avoided a potentially costly government resolution process of Lehman's two banks that will ultimately yield significant recovery value for Lehman creditors.

Shortly after Lehman filed for bankruptcy in 2008, the company said Aurora and Lehman's other multi-billion dollar subsidiary bank Woodlands Commercial Bank were at risk of being seized and placed into receivership by the Federal Deposit Insurance Corp.

Instead, Lehman said it made a series of capital and liquidity injections to initially stabilize and ultimately recapitalize the banks, positioning them for this more favorable outcome.

"In completing the sale of substantially all of Aurora through an open-door process, we have achieved something that has rarely been accomplished over the past few years," Alvarez & Marsal managing director Dough Lambert said in the release.

"In December 2011, we completed the resolution process of Woodlands Bank at no loss or cost to the FDIC or taxpayers, and now with the completion today of the sales of Aurora's residential servicing assets to Nationstar Mortgage LLC and the transfer of all customer deposits to New York Community Bank, we have taken a significant step toward the successful resolution of Aurora."

Sale details

Lehman said Aurora's residential loan portfolios were sold to three separate purchasers over the last several months; the commercial loan portfolios were sold to a single purchaser; the commercial servicing assets were sold to Ocwen Financial; the residential servicing assets were sold to Nationstar; and its customers' deposits were transferred to New York Community Bank.

According to the release, the sale of the residential servicing assets included all of the mortgage servicing rights and related advances owned by Aurora Bank and wholly owned subsidiary Aurora Loan Services, LLC. It also included the sale of the servicing facility in Scottsbluff, Neb., and the assignment of leases of the facilities in Indianapolis and Littleton, Colo.

The company said many of Aurora's employees have taken positions with Nationstar.

Bank continues

Following the closing of its insured deposit portfolio, Lehman said Aurora will continue to exist as a federal savings bank as it seeks to comply with the terms of a consent order it entered into along with 13 other regulated institutions in April 2011.

As a result of the sales, Aurora will retain substantial liquid assets, which will be used to comply with its obligations under the consent order and ultimately distribute its remaining proceeds to Lehman creditors, the release said.

New York-based Lehman Brothers Holdings Inc. was the fourth-largest investment bank in the United States. The company emerged from bankruptcy on March 6, 2012.

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