June 28, 2010

Mortgage-Related Litigation Reaches 3-Year High

by Sheri Qualters
The National Law Journal

Mortgage-related litigation hit a three-year high during this year's first quarter according to a recent report. The increase was fueled partly by a jump in cases involving companies suing each other, as opposed to cases between lenders and homeowners.

There were 155 active state and federal cases during the first quarter of 2010, according to the Mortgage Litigation Index, a study issued jointly by Washington, D.C.-based Patton Boggs and MortgageDaily.com on Wednesday. That compares with 134 in 2009's fourth quarter and 81 cases during last year's first quarter.

The first-quarter cases are the highest number of active lawsuits in any quarter since the organizations started issuing the report. The first report covered all of 2007, and subsequent reports have been quarterly.

The first wave of cases after the subprime mortgage crisis that started a few years ago involved residential owners or borrowers and the parties that held those loans, said Patrick McManemin, a partner in Patton Boggs' Dallas office. The institutions that purchased loans from originating lenders are behind the new wave of disputes and lawsuits. "In essence what we're seeing is the next chapter in the process," McManemin said.

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