American Home Mortgage's Effect On Repo Buyers

Law360, New York (June 26, 2008, 12:00 AM EDT) -- On May 23, 2008, in American Home Mortgage Investment Corp. v. Lehman Brothers Inc., the United States Bankruptcy Court for the District of Delaware held that a transaction involving the purchase and sale of subordinated notes secured by mortgage loans was a “repurchase agreement” and a “securities contract” entitled to the financial contract safe harbor protections of sections 559 and 555 under the Bankruptcy Code.

In so deciding, the Court found that the subordinated notes were “interests in mortgage loans.”

In addition, the Court ruled that...
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