Magazine article Mortgage Banking

Subprime Mortgage Lawsuits Reach 'Unprecedented Escalation'

Magazine article Mortgage Banking

Subprime Mortgage Lawsuits Reach 'Unprecedented Escalation'

Article excerpt

The number of subprime-related lawsuits filed in federal courts reached an "unprecedented escalation" through the third quarter of 2008, while worsening economic conditions promise to drive litigation volume ever higher, according to a study by Chicago-based Navigant Consulting Inc.

Released in December, the Navigant study--Third Quarter 2008 Update: Breaking New Ground--noted that the number of subprime-related cases filed up through the first nine months of 2008 (448 lawsuits) already exceeded by more than 50 percent the total of 294 subprime lawsuits filed for all of 2008.

Filing volume in the third quarter of 2008 was the third-highest on record with 131 new case filings, while the total number of cases filed reached an astounding 742 for the 21-month period ending on Sept. 30, 2008, the survey said.

Until now, the 559 U.S. savings-and-loan (S&L) lawsuits of the early 1990s had been viewed by many as the high-water mark in terms of litigation fallout from a major financial crisis, according to Jeff Nielsen, director of Navigant Consulting's Financial Services Disputes & Investigations Group.

"The bottom line is that new cases continue to be filed much more rapidly than existing cases are being disposed," Nielsen said. …

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