|Morgan Stanley Mortgage Capital Inc. has won a lawsuit against a Maryland-based lender over repurchase demands that were not honored.
U.S. District Judge Andre M. Davis awarded $8.2 million plus costs to Morgan Stanley in its lawsuit against Baltimore American Mortgage Corp. Inc. on Feb. 25. The case was originally filed on March 20, 3007, in U.S. District Court for the District of Maryland.
Hanover-based Baltimore American originally entered into a seller agreement with Morgan Stanley in 2003, the complaint alleged. The agreement called for Baltimore American to repurchase a loan if there was a first-payment default or if the borrower defaulted on any two of the first six payments. Another agreement between the two companies in 2005 called for the same terms.
But when Morgan Stanley advised Baltimore American in 2006 and 2007 of a number of loan defaults and demanded repurchases, the company failed to do so, according to the lawsuit.
“Because of Baltimore American’s refusal to meet its cure and/or repurchase obligations, [Morgan Stanley] remains exposed to further loss and expense in connection with the defaulted loans,” the complaint stated.
Morgan Stanley asked the court to award it the amount of the 32 defaulted loans as well as attorneys’ fees, lawsuit costs and interest.
In its answer to the complaint, Baltimore American claimed it was never given a seller’s guide and denied most of the allegations.
A memorandum signed by the judge said, “Indeed, defendant, by counsel, has seemingly been in and out of the case at various times, and has failed, as well, to cooperate in discovery.
Published reports suggest Baltimore American has been acquired by Xylen Corp.
The lawsuit wasn’t the only action filed by Morgan Stanley seeking repurchases.
Morgan Stanley v. Fremont
Repurchase Demands Litigated
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