Credit Suisse Unit Sues Subprime Mortgage Lender
Saturday, March 31, 2007
A Credit Suisse unit has sued Sunset Direct Lending, a subprime mortgage lender in Lake Oswego, Ore., for failing to buy back $24 million in bad loans.
Credit Suisse's DLJ Mortgage Capital sued Sunset Direct in U.S. District Court in New York on Feb. 27, accusing the lender of breach of contract. Sunset Direct, which is privately held, failed to repurchase loans that were 30 days or more delinquent within three months after they closed, according to the lawsuit.
Defaults on U.S. subprime mortgages rose to a four-year high in the fourth quarter. At least 30 subprime lenders have halted operations, gone bankrupt or sought buyers since the beginning of 2006. Subprime loans, a term applied to some of the riskiest home mortgages, are made to borrowers with poor credit ratings or high debt burdens.
Frank Frazzitta, Sunset Direct's chief financial officer, didn't immediately return a call for comment. Credit Suisse spokesman Pen Pendleton would not comment.
In December, DLJ Mortgage sued Infinity Home Mortgage for failure to repurchase $3 million in bad loans. EMC Mortgage, a unit of Bear Stearns, sued MortgageIT n February 2006 over about $69.8 million in bad loans the lender failed to repurchase.