Los Angeles, California

HomeCaliforniaLos Angeles

Email Miriam Schimmel
Miriam Schimmel
Miriam Schimmel
Attorney •

2007 an Unfortunate Banner Year for Subprime-Related Litigation.

Comments Off

Industry reports indicate that the number of federal court cases stemming from borrower subprime mortgage claims almost doubled in the last half of 2007.  Of those filed, more than one-third were class actions.  By the end of the year, 181 cases had been filed in 2007.  By way of comparison, the number of federal subprime cases filed in 2007 already equals one-half of the cases handled by the Resolution Trust Corp. over a mulit-year period during the savings & loan crisis during the 1990s.  What’s more, the number of subprime cases may in fact be much greater since the statistics here do not include cases filed by lenders or state court cases.

While the majority of the filings were borrower class actions, other categories include Option ARMs (inadequate disclosure claims), discriminatory lending practices, securities fraud class actions (claiming temporary inflation in a company’s stock price based on inaccurate or incomplete disclosures to shareholders), commercial contract disputes relating to representations and warranties given at the time of sale, employment class actions and bankruptcy-related matters.

Interestingly, each of the top ten subprime lenders from the previous year found itself named as a defendant in at least one class action lawsuit. 

Making the news recently was the lawsuit filed under seal by California Attorney General Jerry Brown against Eric Pony, the 25 year old real estate agent accused of a defrauding consumers and putting them into loans with exorbitant fees and payments resulting in an alleged excess of $20 million in damages.