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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.


Appraisal, Modification and Foreclosure Lawsuits Soar

2nd-Quarter Mortgage Litigation Report

August 24, 2009

By MortgageDaily.com staff


A surge in litigation tied to real estate appraisals, loan modifications and foreclosures contributed to a 54 percent increase in mortgage-related lawsuits, according to the Second Quarter Mortgage Litigation Report from MortgageDaily.com. Investor litigation continued to be the busiest category.

The analysis, based on active cases covered by MortgageDaily.com, was prepared in conjunction with the law firm of Patton Boggs LLP, which is known as a leader for its work in mortgage banking litigation.

During the second quarter, 125 cases were tracked, jumping from an already active 81 first-quarter cases. Second-quarter 2008 actions numbered just 42.

Leading the pack were modification cases -- which jumped to 22 from none tracked in the first quarter. Much of the activity was tied to actions against modification firms. The increase in cases coincided with the launch of the Obama administration's Home Affordable Modification program.

Also surging were foreclosure cases, which jumped to 26 actions from just 12.

Investor lawsuits and class actions continued to dominate mortgage-related litigation, rising to 31 cases from 21 in the first quarter. However, as the stock market has recently recovered, third-quarter investor litigation appears to be easing.

Second-quarter appraisal lawsuits increased to 11 from two in the prior period. Appraisal-related activity grew just as the Home Valuation Code of Conduct was implemented.

"Tracking consumer litigation cases like those identified by MortgageDaily.com can help companies identify litigation and regulatory trends," stated Pat McManemin with Patton Boggs. "This is a great way for industry members to mitigate against potential risks affecting products and services."

The table below includes the most active categories.


Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | full-year 2007

Second Quarter 2009 Mortgage Litigation Report

Category
Description
# of Cases Q2 2009 # of Cases Q1 2009
# of Cases Q4 2008
# of Cases Q3 2008
# of Cases Q2 2008
# of Cases Q1 2008
# of Cases Full Year 2007
Total Total Cases Tracked (some cases tracked in multiple categories) 125 81 46
74
45
42
195
Advertising Lawsuits about mortgage advertising, bait and switch ads, deceptive ads and do-not-call violations. 9 4 7
8
2
1
5
Appraisals Litigation related to real estate appraisals, pressuring appraisers and appraisal fraud. 11 2 1
3
0
0
5
Bankruptcy- Consumer Legal issues surrounding borrowers who file for bankruptcy, including servicing bankrupt borrowers. 1 0 0
1
2
8
5
Bankruptcy- Corporate Litigation surrounding companies that file for bankruptcy protection or bankruptcy liquidation 8 2 4
5
3
0
0
Commercial Mortgage Cases related to commercial mortgage lending. 1 1 0
0
0
0
1
Compliance Lawsuits and actions tied to violations of mortgage regulations. 5 8 6
3
1
5
(RESPA)

6
(TILA)
Copyright Lawsuits about copyright, trademark and intellectual property issues. 0 2 0
1
0
0
3
Credit Litigation based on credit reporting and other credit issues. 0 3 0
1
2
3
3
Criminal Cases involving criminal complaints. 5 0 0 0 0 0 0
Discrimination Class actions and lawsuits related to lending discrimination involving minorities, neighborhoods and property types. 5 5 2
2
3
2
Down Payment Assistance Cases about the legality of DPA programs and HUD's ability to prohibit them. 0 0
0
0
0
1
2
Embezzlement Legal actions on mortgage-related embezzlement and accounting fraud. 1 0 1
1
1
0
0
Employment Employment lawsuits involving overtime, employment discrimination and employment contracts. Whistleblowers and WARN notice violation cases also. 3 4 3
0
2
6
Fees Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums. 0 1 4
8
1
2
Foreclosures Servicer-related litigation, foreclosure lawsuits and cases against foreclosure rescue services. 26 12 3
7
6
9
HELOC Cases related to home-equity lines-of-credit 4 0 0 0
0
0
0
Insider Trading Criminal cases about mortgage executives accused of trading securities based on insider information. 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. Other shareholder issues. 31 21 11
9
Leads Litigation about mortgage leads. 0 2 0 0
0
0
0
Licenses Regulator lawsuits and actions against improperly licensed and unlicensed mortgage companies. 5 0 1
8
2
1
2
MBS Lawsuits related to mortgage-backed securities. 16 13 4
0
0
0
2
Mergers Lawsuits relating to mergers and acquisitions. 0 3 0
0
0
0
1
Modifications Actions tied to loan modifications and modification firms. 22 0
0
0
0
0
0
Mortgage Fraud Cases involving mortgage fraud, flipping, identity theft and inflated appraisals. 11 5 5
7
3
Mortgage Insurance Lawsuits tied to mortgage insurance. 2 2 0 0 0 0 0
Net Branch Litigation involving net branch operations. 5 0 1
1
0
1
0
Predatory Lawsuits and regulatory actions against predatory lenders. 6 3 4
7
3
0
7
Preemption Lawsuits about federal regulatory preemption over state regulation. 1 0 1
1
3
0
1
Privacy Lawsuits about privacy issues. 0 4 3
1
1
0
3
Reverse Mortgages Litigation tied to home-equity conversion mortgages and reverse mortgage issues, programs and lenders. 0 1 0 0 0 0 0
Secondary Marketing Cases related to secondary marketing, warehouse lending and repurchases. 5 5 3
3
9
Servicing Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure. 2 6 3
3
2
6
Suitability Lawsuits about mortgage company liability in determining suitability of loans for borrowers. 1 1 3
0
0
0
1
Technology Lending technology issues litigated. 0 0 0
1
1
1
2
YSP Litigation centered around yield spread premiums and YSP disclosures. 2 0 1
0
0
0
4
Total Total Cases Tracked (some cases tracked in multiple categories) 125 81 46
74
45
42
195


*several cases were counted in multiple case types



Q1 2009 | Q4 2008 | Q3 2008 | Q2 2008 | Q1 2008 | full-year 2007

Q1 2009 report

Q4 2008 report

Q3 2008 report

Q2 2008 report

Q1 2008 report

full-year 2007 report


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