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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 Activity Tumbles

3rd-Quarter Mortgage Litigation Report

Nov. 16, 2009

By MortgageDaily.com staff


Firms that collected up-front fees for loan modifications pushed modification-related litigation to the forefront of the Third Quarter Mortgage Litigation Report from MortgageDaily.com. But overall mortgage litigation slowed significantly.

The analysis, based on active cases covered by MortgageDaily.com between July 1 and Sept. 30, 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.

A rash of litigation was filed by states' attorneys general and the Federal Trade Commission as part of "Operation Loan Lies," an initiative launched in July.

But overall active cases covered during the period tumbled to 76 from the second quarter's 125. In the third-quarter 2008, 74 cases were tracked.

With the Dow Jones Industrial Average solidly over 10,000, active investor actions were down to 11 in the third quarter from 31 cases three months earlier. In line with investor activity, mortgage-backed securities litigation tumbled to four cases from 16.

"I am not surprised to see a decline in mortgage-backed and investor litigation as the number of deals remaining to be resolved decreases," said Patrick F. McManemin, a partner in Patton Boggs' Dallas office.

The industry must continue to be conscious of risks affecting their products and services, Mr. McManemin said.

"
For example, we are seeing more courts addressing title and foreclosure issues that signal an increased focus on technical aspects of negotiable instruments and ownership of a lien," Mr. McManemin said.

But despite the increased focus -- and possibly reflecting the seasoning of the Home Affordable Modification Program -- foreclosure litigation sank to 10 cases from 26 in the second quarter.

As the Home Valuation Code of Conduct became more entrenched at U.S. mortgage shops, active appraisal lawsuits fell to two from 11.

The following table reflects the full count of third-quarter cases.


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

Third Quarter 2009 Mortgage Litigation Report

Category
Description
# of Cases Q3 2009 # 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) 76 125 81 46
74
45
42
195
Advertising Lawsuits about mortgage advertising, bait and switch ads, deceptive ads and do-not-call violations. 18 9 4 7
8
2
1
5
Appraisals Litigation related to real estate appraisals, pressuring appraisers and appraisal fraud. 2 11 2 1
3
0
0
5
Bankruptcy- Consumer Legal issues surrounding borrowers who file for bankruptcy, including servicing bankrupt borrowers. 2 1 0 0
1
2
8
5
Bankruptcy- Corporate Litigation surrounding companies that file for bankruptcy protection or bankruptcy liquidation 9 8 2 4
5
3
0
0
Commercial Mortgage Cases related to commercial mortgage lending. 2 1 1 0
0
0
0
1
Compliance Lawsuits and actions tied to violations of mortgage regulations. 3 5 8 6
3
1
5
(RESPA)

6
(TILA)
Copyright Lawsuits about copyright, trademark and intellectual property issues. 0 0 2 0
1
0
0
3
Credit Litigation based on credit reporting and other credit issues. 5 0 3 0
1
2
3
3
Criminal Cases involving criminal complaints. 4 5 0 0 0 0 0 0
Discrimination Class actions and lawsuits related to lending discrimination involving minorities, neighborhoods and property types. 1 5 5 2
2
3
2
Down Payment Assistance Cases about the legality of DPA programs and HUD's ability to prohibit them. 1 0 0
0
0
0
1
2
Embezzlement Legal actions on mortgage-related embezzlement and accounting fraud. 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. 4 3 4 3
0
2
6
Fees Lawsuits involving excessive fees, servicing fees and loan fees beyond state maximums. 0 0 1 4
8
1
2
Foreclosures Servicer-related litigation, foreclosure lawsuits and cases against foreclosure rescue services. 10 26 12 3
7
6
9
HELOC Cases related to home-equity lines-of-credit 0 4 0 0 0
0
0
0
Insider Trading Criminal cases about mortgage executives accused of trading securities based on insider information. 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. Other shareholder issues. 11 31 21 11
9
Leads Litigation about mortgage leads. 2 0 2 0 0
0
0
0
Licenses Regulator lawsuits and actions against improperly licensed and unlicensed mortgage companies. 0 5 0 1
8
2
1
2
MBS Lawsuits related to mortgage-backed securities. 4 16 13 4
0
0
0
2
Mergers Lawsuits relating to mergers and acquisitions. 1 0 3 0
0
0
0
1
Modifications Actions tied to loan modifications and modification firms. 30 22 0
0
0
0
0
0
Mortgage Fraud Cases involving mortgage fraud, flipping, identity theft and inflated appraisals. 3 11 5 5
7
3
Mortgage Insurance Lawsuits tied to mortgage insurance. 0 2 2 0 0 0 0 0
Net Branch Litigation involving net branch operations. 0 5 0 1
1
0
1
0
Predatory Lawsuits and regulatory actions against predatory lenders. 1 6 3 4
7
3
0
7
Preemption Lawsuits about federal regulatory preemption over state regulation. 0 1 0 1
1
3
0
1
Privacy Lawsuits about privacy issues. 0 0 4 3
1
1
0
3
Regulatory Lawsuits by or against regulatory agencies. 1 0 0 0 0 0 0 0
Reverse Mortgages Litigation tied to home-equity conversion mortgages and reverse mortgage issues, programs and lenders. 0 0 1 0 0 0 0 0
Secondary Marketing Cases related to secondary marketing, warehouse lending and repurchases. 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. 3 2 6 3
3
2
6
Suitability Lawsuits about mortgage company liability in determining suitability of loans for borrowers. 0 1 1 3
0
0
0
1
Technology Lending technology issues litigated. 2 0 0 0
1
1
1
2
YSP Litigation centered around yield spread premiums and YSP disclosures. 1 2 0 1
0
0
0
4
Total Total Cases Tracked (some cases tracked in multiple categories) 76 125 81 46
74
45
42
195


*several cases were counted in multiple case types



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


Mortgage Litigation Index Chart
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