Mortgage Litigation - Latest Report Reveals Number Of Cases Increased

According to the Mortgage Litigation Index, legal actions connected with mortgage-lending rose in excess of 40% during the past 3rd quarter of 2010.

The Index data was taken from a report created by Mortgage Daily, a mortgage industry news source and Patton Boggs, a firm widely known in the mortgage litigation arena. They examined over 100 civil and criminal mortgage cases between July 1 and September 30 of 2010.

Legal action was up significantly from the 75 cases reported in the 2nd quarter and was also elevated compared to the same quarter of 2009. Alleged violations by investors was the highest portion of reported activity followed by actions concerning foreclosures a close second.

Actions related to criminal activity, mortgage employment, and MBS rounded out the report.

“In recent months, the focus of mortgage litigation has begun to transition from primarily consumer foreclosure disputes towards loan documentation and servicing issues. Therefore, an increase in residential note repurchase litigation from investors in securitization trusts and banks that face indemnity claims from government-sponsored enterprises should be expected,” said Patrick McManemin, a partner in Patton Boggs’ Dallas office.