Sub-prime mortgage litigation reaches record levelsMortgagePress.comNavigant Consulting Inc., risk management, sub-prime-related cases
Inc., a consulting firm providing dispute, investigative,
operational, risk management and financial advisory solutions, has
released a report that shows the number of sub-prime-related cases
filed in federal courts surged in the first quarter of 2008,
dramatically outpacing 2007 filings. The total filings are close to
surpassing the savings-and-loan (S&L) crisis litigation of the
According to the Navigant Consulting report, the number of
sub-prime-related cases exploded in the first quarter of 2008,
increasing 85 percent over the next busiest quarter. A total of 170
cases were filed during the quarter, approaching the mark of 181
filings over the final six months of 2007.
"Like the credit crunch itself, the litigation is unrelenting,"
said Jeff Nielsen, managing director of Navigant Consulting. "In
this most recent quarter, we are looking at approximately two
filings per day, including weekends. What we saw in 2007 was a mild
breaking wave compared to the tsunami we are witnessing now."
Over a 15-month span ending March 31, 2008, the number of
sub-prime-related cases filed totaled 448, up from 278 previously
reported at year-end 2007. As of March 31, 2008, 86 percent of the
448 cases filed continued to be active.
The first quarter cases were comprised of borrower class actions
(46 percent), securities cases (26 percent) and commercial contract
disputes (10 percent), among other case types. Class action cases
accounted for 76 percent of the 170 cases filed in the first
quarter; however, there were also some atypical plaintiffs entering
the sub-prime litigation scene, such as municipalities like
Baltimore and Cleveland.
The report found that in 42 percent of the 448 cases filed, at
least one Fortune Global 500 company was named as a defendant. Ten
percent of the cases named at least one non-U.S. Global 500 company
as a defendant, with U.K. firms accounting for approximately half
of the non-U.S. total. Geographically, approximately half of the
first quarter cases are still being filed in California and New
For more information, visit www.navigantconsulting.com.