Legal News

Subprime-Crisis Lawsuits: By the Numbers

By Amir Efrati

In recent months the Law Blog has gone out on a limb by bravely declaring that many billables were being generated from the wave of subprime mortgage-related litigation (click here). Now we’ve got the numbers to back up our claims.

Last year, 278 subprime-related lawsuits were filed in federal courts, with the pace doubling during the second half of the year and remaining strong during the first weeks of this year, according to Navigant Consulting. (Click here for the executive summary of Navigant’s report.)

Fortune 500 companies were named in about half of the suits, 90% of which are active.
More than 40% of the cases were filed by home-loan borrowers against lenders, mortgage brokers and many others, alleging discriminatory lending practices, improper charges or inadequate disclosures, among other issues.

Leading the list of plaintiffs firms that have filed borrower-driven putative class-actions: Law Offices of Jeffrey K. Berns in Tarzana, Calif., and Beverly Hills, Calif.-based Kiesel, Boucher & Larson, LLP. The firms told the Law Blog they’ve jointly filed more than 50 suits, including many alleging violations of disclosure requirements during the sale of certain adjustable-rate mortgages, called “option ARMs,” that ensnared even borrwers with good credit. (Click here and here for background.)

Wannabe securities class-actions brought by investors of mortgage-backed securities and others made up about one-fifth of the filings, or more than 60 suits, and it’s perhaps no surprise to learn that San Diego-based plaintiffs powerhouse Coughlin Stoia Geller Rudman & Robbins LLP filed the most–more than a dozen–followed by Keller Rohrback in Seattle, according to Navigant.

Jeff Nielsen, Navigant’s managing director, says government probes of lenders that made subprime and other risky loans and investment banks that sold mortgage-backed securities to investors could spur even more litigation. “This is just the beginning,” he said.

Full post as published by Law Blog - WSJ.com on February 14, 2008 (boomark / email).