From the Orange County Register online:
“BNC Mortgage, an Irvine-based subprime lender, filed for bankruptcy today to wind down its assets along with its parent Lehman Brothers, which also is bankrupt, reports Bloomberg.
The lender listed assets and debt of more than $1 billion each in its Chapter 11 petition in Manhattan. Here’s more from Bloomberg:
Lehman bought the unit, which specialized in subprime loans, in 2004, bringing it into the business which eventually led to the company’s demise. Lehman filed the biggest bankruptcy ever on Sept. 15, listing debt of $613 billion.
BNC joins another Lehman unit, Luxembourg-based Luxembourg Residential Properties Loan Finance, which filed for court protection in New York on Jan. 7. Both units want their bankruptcies consolidated with Lehman’s, according to court documents.
Consolidation is necessary ‘to experience a smooth transition into Chapter 11 with a minimum of delay, cost, and expense for the benefit of all parties in interest,’ lawyers for BNC Mortgage said in court documents.
BNC Mortgage, along with another acquisition, Aurora Loan Services LLC, were used by Lehman to create a steady flow of debt to package into bonds. In the first quarter of 2006, BNC was lending more than $1 billion a month.
Lehman closed the unit on Aug. 22, exiting the subprime business as it declared that the U.S. housing recession was far from over. Subprime loans, made to homebuyers with weak or limited credit histories, were cited by Lehman in its bankruptcy filing.
Luxembourg Properties and BNC Mortgage will seek consolidation with the Lehman case at a hearing Jan. 14.”
Other subprime lenders from the area that have been hit hard during this economic crisis include Option One Mortgage Company (headquartered in Irvine), BNC Mortgage (also headquartered in Irvine), and Argent Mortgage Co. (based in Orange).
Whether seen in the increase in Chapter 7, consumer bankruptcy filings or in the high-profile bankruptcy reorganization of a billion dollar company, it is clear that this crisis is still hitting Orange County hard. While mom and pop shops in cities like Lake Forest, Tustin, and Laguna Hills are struggling, so too are the corporations in Irvine and Newport Beach.
