Subprime Crisis To Trigger Wave Of Lawsuits
Fueled by the meltdown in the subprime mortgage market, borrowers, investors, and others filed 278 subprime-related lawsuits in federal courts in 2007 – and it’s likely just the beginning.
According to a newly released study by Navigant Consulting, Inc., subprime mortgage litigation already is outpacing the number of lawsuits that grew out of the savings and loan meltdown of the late 1980s and early 1990s.
The Navigant study showed that 43 percent of the subprime-related cases filed last year were borrower class action suits; other cases included securities investor claims, commercial contract disputes, employment class actions and bankruptcy-related cases.
Nearly every participant in the subprime collapse is being sued, according to the study. Fortune 1000 companies were named in more than half of the cases. Defendants included mortgage brokers, lenders, appraisers, title companies, home builders, servicers, issuers, underwriters, bond insurers, money managers, public accounting firms and company directors and officers, as well as others.
BusinessWeek, a number of the country’s major law firms have been preparing for the expected wave of subprime litigation for some time now, with many forming “subprime lending taskforces†to deal with the anticipated lawsuits.
According to Orey, the number of subprime lawsuits filed is just the tip of the iceberg. Many investors may purposefully be holding back taking legal action until they can determine the full extent of their portfolios’ losses or are waiting to learn the outcome of ongoing state and federal investigations into the financial institutions involved in their individual cases.
Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage related investment losses.
