UPDATE 2-US judge approves Lehman plan for more bank capital

* Lehman to pump $15 mln into ailing bank

* Lehman to transfer mortgage servicing rights

* Lehman to seek to end $1.375 billion credit line (Adds OTS approval status, background on previous capital injection)

By Phil Wahba

NEW YORK, March 31 (Reuters) - Bankrupt Lehman Brothers Holdings Inc (LEHMQ.PK) won court permission Tuesday to pump additional capital into one of its ailing banks for a third time, including a cash injection and a transfer of mortgage servicing rights to the bank.

The order by Judge James Peck of the U.S. Bankruptcy Court in Manhattan will allow Lehman to pump $15 million into the bank, Lehman Brothers Bank FSB, which is not bankrupt.

Lehman also plans to transfer its mortgage servicing rights to a bank affiliate and end a $1.375 billion line of credit extended to various Lehman units, including two of its banks, by a number of institutions, including General Electric Capital Corp (GE.N) in an effort to improve the bank's balance sheet.

Speaking in court, Lehman lawyer Alfredo Perez said the measures were necessary for the bank to meet U.S. government requirements.

"I am happy to say we are not flirting with 8 percent, we're flirting with 10 percent, which will reduce our funding costs," Perez said, referring to required capital ratios.