Fourteen institutional investors, including a unit of BlackRock Inc., said Monday that the estate of Lehman Brothers Holdings Inc. has offered to pay more than $2 billion to settle a suit over the defunct bank’s failure to repurchase dud mortgages that it sold to investors before the financial crisis.
Investors that bought residential mortgage-backed securities from Lehman were left holding the bag in 2008 when the company filed for bankruptcy. As the housing market collapsed and default rates rose, the investment bank wasn’t able to honor its commitment to buy bank mortgages that didn’t measure up to the standards it promised.
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