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.
