Credit Suisse Unit Sues Subprime Mortgage Lender

Oh, man…this is starting to get really good.  If there was any doubt about the potential for widespread craziness stemming from the recent subprime mortgage meltdown, a Credit Suisse unit alleviated that by embarking on that most American of pass-times: filing law suits.

A Credit Suisse mortgage division, DLJ Mortgage Capital, filed suit in late February against Sunset Direct Lending, a subprime mortgage lender based in Oregon.  Why?  Because Sunset didn’t buy back $24 million in <i>really</i> bad loans it had sold to DLJ, who as it turns out, was only looking for run-of-the-mill bad loans.

According to Credit Suisse, the suit is for breach of contract since it stipulated Sunset was to buy back any loans sold in a larger portfolio that were 30 or more days delinquent 3 months after they closed – basically, immediate defaults.

This is not the first – and obviously, not the last – lawsuit between banks over subprime mortgage loans.  In fact, DLJ has already sued over buy backs, as has EMC Mortgage, a division of Bear Stearns.  It is not known when someone will point out that suing over purchased bad loans is a little like complaining to a cop that the pot you bought was bad.  But whatever.