twitter linkedin
facebook google+

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from

Mortgage News Reprints
Put entire stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed stories free on your Web site or for your RSS reader.

News Archives
Archive of stories by month going back to 1999.

Press Releases
Reports and announcements from

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News


Mortgage News

HOT Topics









site map
Mortgage Lawsuits News | Mortgage Litigation Index
Mortgage industry lawsuit news and mortgage litigation coverage. Stories about legal settlements, judgments and mortgage class actions.

Cleveland Appeals Subprime Judgment

City of Cleveland v. subprime securitizers

May 19, 2009

By staff

A federal judge has dismissed a lawsuit filed by the City of Cleveland against several investment bankers that allegedly helped create the city's foreclosure crisis by securitizing risky subprime loans. The city has since appealed the judgment.

The case was originally filed in January 2008 against more than 20 defendants -- including Ameriquest Mortgage Securities Inc., Chase Bank USA, N.A., and Citibank N.A. -- who are blamed for the "epidemic of foreclosures afflicting the city," according to court records. By helping to package subprime loans into residential mortgage-backed securities, the defendants allegedly enabled the bad lending practices that led to the current crisis.

In a second amended complaint, Cleveland claims that the defendants should have known that foreclosures would spike as a result of their activities. It sought to recover costs for monitoring, maintaining, and demolishing foreclosed properties. In addition, it also sought the "diminution" in property tax revenues as a result of foreclosures.

The city based its case on its public nuisance law.

But the defendants fired back, claiming that Cleveland's public nuisance claim is preempted by Ohio law and barred by the economic loss doctrine -- which "precludes recovery in tort for purely economic losses not arising from tangible physical harm to persons or property."

In addition, the lenders claim that the city has not alleged unreasonable interference with a public right, and its allegations "are insufficient to demonstrate proximate cause."

The lenders also claim that the city's move amounts to an attempt to regulate mortgage activities in violation of the Ohio Revised Code.

The judge agreed.

On Friday, federal district court Judge Sara Lioi ruled in favor of the defendants and dismissed the case. She noted that the economic loss doctrine bars the city's claim and that the city's allegations don't establish unreasonable interference with a public right. The judge also said Cleveland's allegations are insufficient to demonstrate that the "defendants' conduct proximately caused its alleged damages."

Cleveland filed an appeal yesterday in U.S. District Court for the Northern District of Ohio Eastern Division.

Defendants named in the case are:

  • Ameriquest Mortgage Securities Inc.;
  • Bank of America, N.A.;
  • Bear Stearns & Co. Inc.;
  • Chase Bank USA, N.A.;
  • Citibank N.A.;
  • Citigroup Global Markets Inc.;
  • Countrywide Securities Corp.;
  • Credit Suisse USA Inc.;
  • Credit Suisse (USA) LLC;
  • Deutsche Bank Securities Inc.
  • GMAC-RFC Holding Co.
  • Goldman Sachs & Co.;
  • Greenwich Capital Markets Inc.;
  • HSBC Securities (USA) Inc.;
  • JP Morgan Acquisition Corp.
  • Merrill Lynch, Pierce, Fenner & Smith Inc.;
  • Morgan Stanley & Co. Inc.;
  • Novastar Mortgage Inc.;
  • Option One Mortgage Corp.;
  • Washington Mutual Bank.;
  • Wells Fargo Asset Securities Corp.; and
  • Wells Fargo Bank, N.A.

City of Cleveland, Plaintiff vs. Ameriquest Mortgage Securities, Inc., et al, Defendants.
Case No.1:08-cv-00139-SL, docket numbers 197, 199, 202, 205, 207, 208, 209 and 228; Jan. 16, 2008 (U.S. District Court for the Northern District of Ohio Eastern Division).

Cleveland Suing Securitizers, Lenders
The city of Cleveland, stung by declining property tax revenues, is attempting to reach into the deep pockets of Wall Street firms. The city has filed a lawsuit against 21 mortgage lenders and investment bankers.

Mortgage Backed Securities | MBS News | MBS Statistics
News about commercial and residential mortgage-backed securities. Stories about ratings actions and changes to servicer ratings. Studies and reports about the performance of securitizations and problem vintages and classes. Subprime, Alt-A, home equity and j u m b o analysis.

Nonprime and Subprime News | Subprime Statistics
Stories about non-QM products. Coverage of subprime, Alt-A and
hard money lending. Home-equity loans and home-equity lines of credit.

Logout forgot

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders