Mortgage Lawsuits Ease in 4Q08

Despite a surge in actions taken by bank regulators, overall mortgage litigation eased, according to a new report released by mortgage industry news source MortgageDaily.com.

A total of 202 active cases were tracked in the latest Fourth Quarter 2008 Mortgage Litigation Report. Many fell into more than one of the 22 categories covered during 4Q08. Excluding regulatory-only actions, 46 cases were tracked - dropping from 74 cases in 3Q08 but about the same as the quarterly average for 2007.

The biggest volume of activity was with regulatory actions, which jumped to 161 from 3Q08's 126 - reflecting deteriorating capital at the weakest U.S. banks. Investor class actions eased, though 11 cases were still tracked.

After no third-quarter activity, four mortgage-backed securities lawsuits, three mortgage employment lawsuits and three suitability cases were tracked in the fourth quarter. Most categories, however, saw a decline during the fourth quarter. Cases tied to mortgage compliance dropped to six in 4Q08 from 18 in 3Q08. Mortgage fraud litigation was down similarly, falling to only five cases in the fourth quarter of 2008 from 18 from the previous quarter. Secondary marketing lawsuits fell to just three cases from 12.

Mortgage fee lawsuits were down by half in the fourth quarter, while predatory lending actions declined 43%. Fourth-quarter foreclosure lawsuits were off by more than half, possibly due to private and public efforts to stem foreclosures.

The analysis, based on active cases covered by MortgageDaily.com, was prepared in conjunction with the law firm of Weiner Brodsky Sidman Kider PC, which specializes in mortgage banking litigation.