Investor Fraud Dominated Mortgage Lawsuits in 2007

February 11, 2008 No Comments »

fraud

Mortgage-related lawsuits in 2007 were dominated by investors accusing banks and mortgage lenders of fraud, according to a report prepared by Mortgagedaily.com and the law firm of Weiner Brodsky Sidman Kider PC.

During the year, 53 such cases were reviewed where mortgage companies were accused of misleading investors, many of which turned out to be class action suits.

Mortgage fraud came in a distant second with 25 cases, including cases where lenders allegedly pressured appraisers to inflate property values.

It was followed by 23 secondary marketing suits where investors attempted to recoup losses on bundles of mortgages that experienced early default or involved fraud.

Mortgage employment cases were also a major issue, with 16 suits reviewed during the year involving WARN notices, overtime, discrimination, and employment contracts.

“With the collapse of the subprime mortgage market and the spillover effect on the rest of the housing market, these are undeniably challenging times,” Mitch Kider, managing partner of Weiner Brodsky Sidman Kider PC said. “According to some observers, the litigation spawned by the subprime crisis will be unprecedented.”

The report covers 26 different types of lawsuits, ranging from advertising-related cases to those involving yield-spread premium.

Take a look at all the cases reviewed by category and number below:

Category # of Cases

Advertising – 5
Appraisals – 5
Bankruptcy – 7
Commercial – 1
Copyright – 3
Credit – 3
Discrimination – 14
Down Payment Assistance – 2
Employment – 16
Fees – 13
Foreclosures – 11
Fraud – 25
Insider Trading – 2
Investor – 53
Licenses – 2
Mergers – 1
Predatory – 7
Privacy – 3
RESPA – 5
RMBS – 2
Secondary Marketing – 23
Servicing – 14
Suitability – 1
Technology – 2
TILA – 6
YSP – 4

(Photo: guano)

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