Modification Actions Drive Record Mortgage Litigation

DALLAS, March 8 /PRNewswire/ -- Legal actions against mortgage modification firms continued to surge -- pushing overall mortgage litigation activity to the highest level yet, according to the Fourth Quarter Mortgage Litigation Index produced by MortgageDaily.com.

The analysis, based on active cases covered by MortgageDaily.com from Oct. 1 to Dec. 31, 2009, was prepared in conjunction with Patton Boggs LLP, a known leader in mortgage banking litigation.

During that period, 134 mortgage-related lawsuits were tracked, an increase from 76 cases documented in the third quarter. It was the highest quarter on record since tracking began in 2007.

In the fourth-quarter 2008, 46 cases were tracked.

Loan modification cases were the driving force behind the increase, more than doubling from the third quarter.

"State and federal agencies are aggressively cracking down on modification scammers with severe criminal and civil penalties," said Patrick McManemin, a partner in the Dallas office of Patton Boggs. "The upward trend in related fraud litigation is likely to continue."

McManemin urged industry participants to stay abreast of related legislation, paying close attention to states enacting laws that impose licensing requirements on third-party modification companies.

MBS lawsuits skyrocketed in the fourth quarter, up over 300 percent from the third quarter 2009 and a year earlier.

"Additionally, on the civil side, repo claims and mortgage insurance rejections continue to dominate the landscape as more institutions are forced to recognize losses and deal with balance sheet issues arising out of defaults," McManemin said.

Foreclosure lawsuits more than quadrupled from the fourth-quarter 2008 and were up 70 percent from the third quarter. Mortgage fraud litigation doubled from 2008 and tripled from the prior quarter, while criminal cases more than doubled.

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About MortgageDaily.com

Founded in 1998, http://www.MortgageDaily.com provides online mortgage news and analysis for the mortgage industry. Around 1 million pages are viewed monthly at MortgageDaily.com and its affiliate publications.

About Patton Boggs LLP

Based in Washington DC, Patton Boggs LLP is a national leader in public policy and regulatory, litigation and business law, and is well known for its deep bipartisan roots in the national political arena. Visit www.PattonBoggs.com.

SOURCE MortgageDaily.com