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


Mortgage Litigation Index Sets New Record

Fourth-Quarter 2011 Mortgage Litigation Index 244

April 9, 2012

By MortgageDaily.com staff


Foreclosure cases dominated quarterly litigation activity tied to mortgage banking and show no sign of relenting -- helping to push the Mortgage Litigation Index to an all-time high. Among categories to show the worst deterioration were criminal, servicing and mortgage fraud. But investor actions have been slowing.

A total of 244 cases were tracked in Mortgage Daily's fourth-quarter 2011 Mortgage Litigation Index
-- the highest number since the index was launched in 2007. The report provides an anecdotal account of activity on mortgage-related legal actions deemed important to mortgage firms by Mortgage Daily's editorial staff. (view full table below)

Case count jumped from 218 in the third quarter and 151 during the final quarter of 2010.

Accompanying the latest index is a white paper prepared by Christopher Willis, a partner at Ballard Spahr LLP who works in the firm's consumer financial services group.

An upcoming free webinar about the report is expected to be announced shortly.

"Unfortunately, the phenomena that led to the surge in litigation in the fourth quarter of 2011 have only intensified in 2012, suggesting that we are unlikely to see a significant decline in litigation in the near term," Willis said in the analysis.

Helping to lift fourth-quarter activity were criminal cases, which climbed to 57 from the third quarter's 34. These include cases with crimes alleged against mortgage lenders, investors or borrowers. Willis said that he expects an increase in indictments from alleged "robo-signings" and from the investigation into mortgage-backed securities being headed up by New York Attorney General Eric Schneiderman.

Activity on litigation related to mortgage servicing grew to 70 cases from 51 three months earlier. Among issues involved in these cases are consumer bankruptcies, escrow accounts and payment collection. Forced-placed insurance is also an emerging issue here.

Mortgage fraud cases, those typically involving insiders at mortgage firms or a foreclosure-rescue scheme, increased to 23 from just five during the previous quarter.

Meanwhile, the number of cases related to fees leapt to 17 from the prior period's two. Typically at issue in this category are fees collected at origination, servicing fees or fees allegedly owed to county recorder offices.

Another category with a big increase was "title," which expanded to 46 cases from 31 in the third quarter. These cases involve a challenge to a lender's ownership of a mortgage.

The following table compares the top fourth-quarter categories with earlier periods.

Category Q4 2011 Q3 2011 Q4 2010
Total 244 218 151
Foreclosures 99 90 40
Servicing 70 51 26
Investor 62 82 46
Criminal 57 34 26
Title 46 31 2


Foreclosure litigation was the biggest category in the latest report with activity tracked on 99 cases. The foreclosure category includes cases where courts ruled in favor of borrowers who disputed their foreclosures and cases involving foreclosure-rescue firms. The white paper projects that publicity associated with the multi-state settlement will overshadow any decrease in new foreclosure filings and keep activity in this category elevated.

"Many of the categories showing a high number of cases in the final quarter of 2011 are ones exempted from the national multi-state mortgage servicing settlement, released in March 2012," Willis stated. "Other categories, while not discussed as part of the settlement, correspond with well-publicized litigation activity, or areas that have been prioritized by the CFPB and state attorneys general."

Litigation tied to investors tumbled by 20 cases from the third quarter to 62. This category typically involves alleged violations of the Securities and Exchange Act of 1934.

MBS cases were also slower, falling to 44 cases from the third quarter's 62. In addition to MBS investor issues, these cases involve issues related to the securitization process.

The number of legal actions taken against or by financial regulators declined to 16 from 29 three months earlier.


Fourth-Quarter 2011 Mortgage Litigation Index 244


Fourth Quarter 2011 Mortgage Litigation Index
Case Count by Type & Quarter

Category
Description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
Full Year 2007
Total Total Cases Tracked (some cases tracked in multiple categories) 244 218 190 151 151 106 75 155 134 76 125 81 46
Advertising Lawsuits about mortgage advertising, bait and switch ads, deceptive ads and do-not-call violations. 4 1 0 4 4 2 2 4 13 18 9 4 7
8
2
1
5
Appraisals Litigation related to real estate appraisals, pressuring appraisers and appraisal fraud. 6 4 2 1 0 0 1 2 0 2 11 2 1
3
0
0
5
Bankruptcy- Consumer Legal issues surrounding borrowers who file for bankruptcy, including servicing bankrupt borrowers. 7 1 4 5 3 3 2 6 2 2 1 0 0
1
2
8
5
Bankruptcy- Corporate Litigation surrounding companies that file for bankruptcy protection or bankruptcy liquidation 4 5 1 3 5 6 4 9 7 9 8 2 4
5
3
0
0
Commercial Mortgage Cases related to commercial mortgage lending. 2 1 2 1 1 0 0 4 1 2 1 1 0
0
0
0
1
Commitments Loan commitment litigation. 1 0 0 0 0 0 0 2
0
0
0
0
0
0
0
0
0
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007
Compliance Lawsuits and actions tied to violations of mortgage regulations. 7 11 22 5 4 0 0 7 4 3 5 8 6
3
1
5 (RESPA),
6 (TILA)
Copyright Lawsuits about copyright, trademark and intellectual property issues. 0 1 0 0 0 1 1 2 1 0 0 2 0
1
0
0
3
Credit Litigation based on credit reporting and other credit issues. 0 1 0 1 0 2 3 1 9 5 0 3 0
1
2
3
3
Criminal Cases involving criminal complaints. 57 34 44 27 26 17 11 24 11 4 5 0 0 0 0 0 0
Discrimination Class actions and lawsuits related to lending discrimination involving minorities, neighborhoods and property types. 8 3 12 1 1 1 1 2 2 1 5 5 2
2
3
2
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007
Down Payment Assistance Cases about the legality of DPA programs and HUD's ability to prohibit them. 0 0 0 0 0 0 0 0 0 1 0 0
0
0
0
1
2
Embezzlement Legal actions on mortgage-related embezzlement. 6 2 5 4 5 4 0 3 2 0 1 0 1
1
1
0
0
Employment Employment lawsuits involving overtime, employment discrimination and employment contracts. Whistleblowers and WARN notice violation cases also. 5 10 9 11 8 12 3 8 3 4 3 4 3
0
2
6
Fees Lawsuits involving excessive fees collected at origination, servicing fees and loan fees that exceed state maximums. Also includes fees to county recorders. 17 2 5 6 2 0 2 2 0 0 0 1 4
8
1
2
Foreclosures Foreclosure lawsuits and cases involving mortgage servicers or foreclosure rescue services. 99 90 67 46 40 21 29 33 17 10 26 12 3
7
6
9
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007
HELOC Cases related to home-equity lines-of-credit 2 1 0 1 1 0 0 0 0 0 4 0 0 0
0
0
0
Insider Trading Criminal cases about mortgage executives accused of trading securities based on insider information. 0 0 1 0 0 0 0 0 0 1 1 0 0
0
0
0
2
Investor Shareholder lawsuits and class actions accusing companies of inflating earnings, overstating capital position or otherwise deceiving investors in the company. Typically involves alleged violations of the Securities and Exchange Act of 1934. 62 82 50 42 46 23 26 38 18 11 31 21 11
9
Leads Litigation about mortgage leads. 1 2 2 0 0 1 0 1 1 2 0 2 0 0
0
0
0
Licenses Regulator lawsuits and actions against improperly licensed and unlicensed mortgage companies. 3 1 1 0 6 4 1 1 4 0 5 0 1
8
2
1
2
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007
MBS Lawsuits related to mortgage-backed securities. 44 62 26 19 22 12 13 26 17 4 16 13 4
0
0
0
2
Mergers Lawsuits relating to mergers and acquisitions. 0 1 0 0 1 0 0 1 0 1 0 3 0
0
0
0
1
Military Actions involving military borrowers (added to report in Q2 2011). 1 2 2 2 0
0
0
0
1
0
0
0
1
0 0
0
0
Modifications Actions tied to loan modifications and modification firms. 21 21 19 24 37 12 6 15 61 30 22 0
0
0
0
0
0
Mortgage Fraud Big cases involving mortgage fraud, flipping, identity theft and inflated appraisals where a lender employee or foreclosure rescue scheme is involved. 23 5 10 12 7 5 5 10 11 3 11 5 5
7
3
Mortgage Insurance Lawsuits tied to mortgage insurance. 9 0 1 1 1 0 0 24 4 0 2 2 0 0 0 0 0
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007
Net Branch Litigation involving net branch operations. 2 0 0 0 0 0 0 0 0 0 5 0 1
1
0
1
0
Predatory Lawsuits and regulatory actions against predatory lenders. 2 2 0 1 4 2 1 6 3 1 6 3 4
7
3
0
7
Preemption Lawsuits about federal regulatory preemption over state regulation. 0 0 0 0 0 0 0 0 0 0 1 0 1
1
3
0
1
Privacy Lawsuits about privacy issues. 1 2 0 1 0 0 0 1 1 0 0 4 3
1
1
0
3
Regulatory Legal actions taken by or against regulatory agencies. Excludes regulatory orders. 16 29 30 7 1 6 0 0 0 1 0 0 0 0 0 0 0
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007
Reverse Mortgages Litigation tied to home-equity conversion mortgages and reverse mortgage issues, programs and lenders. 0 1 1 1 2 0 0 3 0 0 0 1 0 0 0 0 0
Secondary Marketing Cases related to secondary marketing, warehouse lending and repurchases. 10 8 27 11 15 8 3 4 4 2 5 5 3
3
9
Servicing Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure. 70 51 65 49 26 5 9 3 6 3 2 6 3
3
2
6
Suitability Lawsuits about mortgage company liability in determining suitability of loans for borrowers. 3 0 0 1 0 0 0 2 1 0 1 1 3
0
0
0
1
Technology Lending technology issues litigated. 0 0 0 0 1 0 1 2 1 2 0 0 0
1
1
1
2
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007
Title Litigation tied to property title and title insurance claims. 46 31 6 8 2 5 3 1 0 0 0 0 0 0 0 0 0
Whistleblower Actions filed under False Claims Act. 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
YSP Litigation centered around yield spread premiums and YSP disclosures. 0 0 1 0 1 1 1 0 0 1 2 0 1
0
0
0
4
Total Total Cases Tracked (some cases tracked in multiple categories) 244 218 190 151 151 106 75 155 134 76 125 81 46
category
description
Q4 2011 Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009
Q4 2008
Q3 2008
Q2 2008
Q1 2008
full-year 2007


*several cases were counted in multiple case types


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.




Servicing News | Servicer Ranking | Delinquency Statistics
Stories about mortgage servicers, delinquency and f o r e c l o s u r e s. Coverage of servicing lawsuits and loan servicing technology.


Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.


Mortgage Fraud News | Fraud Statistics | Fraud Index | Fraud Blog
Mortgage broker, originator and banker criminal cases. Real estate flipping and appraisal fraud. Mortgage fraud prevention, studies and analysis.



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