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Mortgage Attorneys See Surge in Cases

Review of third-quarter mortgage-related litigation

December 1, 2008

By MortgageDaily.com staff


Legal actions tied to mortgage compliance, mortgage fraud and regulatory orders have surged, according to the Third Quarter Mortgage Litigation Report.

The report, based on active cases covered by MortgageDaily.com, was prepared in conjunction with the law firm of Weiner Brodsky Sidman Kider PC.

Lawsuits and regulatory actions tied to compliance violations totaled 18 in the third quarter, rising from just three cases covered in the prior quarter. During the first quarter, just one case was tracked. Third-quarter compliance actions were concentrated on RESPA and TILA violations.

Cases involving mortgage fraud totaled 18 during the latest period, up from seven during the second quarter. Only three fraud cases were tracked in the first quarter. Individual criminal cases were generally excluded.

The third quarter report was the first time regulatory actions against financial institutions and mortgage licensees were covered in the report. The number of actions tracked was 126. Much of the activity was tied to bank regulator actions against undercapitalized institutions.

A total of 200 active cases were tracked in the latest report. Many fell into more than one of the 30 categories covered. Excluding regulatory actions, 74 cases were tracked -- soaring from 45 in the second quarter and 42 cases in the first quarter. During all of last year, 195 cases were tracked.

Category
Description
# of Cases Q3 2008
# of Cases Q2 2008
# of Cases Q1 2008
# of Cases Full Year 2007
Advertising Lawsuits about mortgage advertising, bait and switch ads, deceptive ads and do-not-call violations.
8
2
1
5
Appraisals Litigation related to real estate appraisals, pressuring appraisers and appraisal fraud.
3
0
0
5
Bankruptcy- Consumer Legal issues surrounding borrowers who file for bankruptcy, including servicing bankrupt borrowers.
1
2
8
5
Bankruptcy- Corporate Litigation surrounding companies that file for bankruptcy protection or bankruptcy liquidation
5
3
0
0
Commercial Mortgage Cases related to commercial mortgage lending.
0
0
0
1
Compliance Lawsuits and regulatory actions tied to violations of the Equal Credit Opportunity Act (ECOA), Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), Fair Housing Act, Home Mortgage Disclosure Act (HMDA), FTC Act, Home Owners Equity Protection Act (HOEPA), Real Estate Settlement Procedures Act (RESPA) and Truth In Lending Act (TILA).
3
1
5 (RESPA)

6 (TILA)
Copyright Lawsuits about copyright, trademark and intellectual property issues.
1
0
0
3
Credit Litigation based on credit reporting and other credit issues.
1
2
3
3
Discrimination Class actions and lawsuits related to lending discrimination involving minorities, neighborhoods and property types.
2
3
2
Down Payment Assistance Cases about the legality of DPA programs and HUD's ability to prohibit them.
0
0
1
2
Embezzlement Legal actions on mortgage-related embezzlement and accounting fraud.
1
1
0
0
Employment Employment lawsuits involving overtime, employment discrimination and employment contracts. Whistleblowers and WARN notice violation cases also.
0
2
6
Fees Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums.
8
1
2
Foreclosures Servicer-related litigation, foreclosure lawsuits and cases against foreclosure rescue services.
7
6
9
Insider Trading Criminal cases about mortgage executives accused of trading securities based on insider information.
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.
9
Licenses Regulator lawsuits and actions against improperly licensed and unlicensed mortgage companies.
8
2
1
2
Mergers Lawsuits relating to mergers and acquisitions.
0
0
0
1
Mortgage Fraud Cases involving mortgage fraud, flipping, identity theft and inflated appraisals.
7
3
Net Branch Litigation involving net branch operations.
1
0
1
0
Predatory Lawsuits and regulatory actions against predatory lenders.
7
3
0
7
Preemption Lawsuits about federal regulatory preemption over state regulation.
1
3
0
1
Privacy Lawsuits about privacy issues.
1
1
0
3
Regulatory Regulator actions against financial institutions and mortgage licensees.
na
na
na
RMBS Lawsuits related to mortgage-backed securities.
0
0
0
2
Secondary Marketing Cases related to secondary marketing, warehouse lending and repurchases.
3
9
Servicing Litigation related to loan servicing, including escrow issues, transfer of servicing and servicing borrowers in bankruptcy and foreclosure.
3
2
6
Suitability Lawsuits about mortgage company liability in determining suitability of loans for borrowers.
0
0
0
1
Technology Lending technology issues litigated.
1
1
1
2
YSP Litigation centered around yield spread premiums and YSP disclosures.
0
0
0
4
Total Total Cases Tracked (some cases tracked in multiple categories)
200
45
42
195


*several cases were counted in multiple case types


Weiner Brodsky Sidman Kider PC
Weiner Brodsky Sidman Kider PC
1300 19th Street NW 5th Floor
Washington DC 20036
202.628.2000
www/WBSK.com


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