Report: Mortgage Litigation Hits New High

Posted by Orb Staff on June 23, 2010 No Comments
Categories : Mortgage Servicing

e in legal actions tied to foreclosures and investor-related cases helped push the Mortgage Litigation Index to an all-time high during the first quarter, according to a new report. Active cases from Jan. 1 to March 31 totaled 155, according to the report, which reflects litigation covered by MortgageDaily.com and is prepared in conjunction with Patton Boggs. It was the highest quarter since the report was launched in 2007. Litigation rose from 134 cases tracked in the prior quarter and just 81 cases a year earlier. Fueling the increase were investor-related cases, which jumped to 38 from 18 three months earlier. Mortgage insurance cases increased to 24 from only four the previous quarter. ‘Financial institutions, mortgage insurers, including the Federal Housing Administration, and most holders of notes are scrutinizing loan files and looking for lender errors to deny claims,’ says Pat McManemin, a partner at Patton Boggs. ‘It's a similar situation with Fannie and Freddie – both of which have been hitting seller servicers with repurchase demands. As the amounts in controversy become material to all parties involved, the law in this area, including the application of holder in due course principles, will be developed.’ Lawsuits tied to mortgage-backed securities climbed to 26 cases, while criminal cases were up more than 100% to 24. Foreclosure litigation nearly doubled, growing from 17 cases in the fourth quarter of 2009 to 33 actions in the first quarter of the year. Much of this activity was criminal and the result of stepped-up efforts by state and federal regulators, MortgageDaily.com and Patton Boggs say. The full report can be found on [link=http://www.mortgagedaily.com/MortgageLitigationReport.asp?spcode=pr]MortgageDaily.com[/link]. SOURCES: [link=http://www.pattonboggs.com]Patton Boggs[/link], [link=http://www.mortgagedaily.com]MortgageDaily

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