Subprime Mortgage Lawsuits Surpass S&L Crisis
The number of subprime-related lawsuits filed in federal courts through the second quarter of 2008 has now topped the savings-and-loan (S&L) litigation of the early 1990s, according to a study by Chicago-based Navigant Consulting Inc.
Released on Sept. 11, the Navigant study--Second Quarter Update: Setting the Bar--noted that the number of subprime-related cases filed up through the second quarter has topped the total 559 S&L cases handled by the Resolution Trust Corporation (RTC) over a multiple-year period.
Until now, the S&L lawsuits 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.
"It is perhaps of little surprise that as the current crisis takes on unprecedented scale, the related litigation would as well," said Nielsen. "We are now more than a year into the credit crisis, and the litigation continues to pile up."
The report noted that of the 607 subprime-related cases filed in federal courts over the 18 months ended June 30, 2008, 310 were filed in just the first six months of 2008--more than the 297 filed during all of 2007. Furthermore, the report noted that in the second quarter of 2008, more than three new cases were filed for every one that was disposed--most of which were filed in earlier quarters.
However, the report also notes that certain categories of filings are beginning to slow. …