Subprime Mortgage Litigation Continues to Explode
The number of subprime mortgage-related cases exploded in the first quarter of 2008, increasing 85 percent from the fourth quarter of 2007. A staggering 170 cases were filed during the quarter, enough to approach the 181 subprime-driven filings recorded over the final six months of 2007, according to a study released Wednesday by Navigant Consulting, Inc (NCI). "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 in March, the number of subprime-related cases filed totaled 448, up from 278 previously reported at year-end 2007. "The cases are piling up at a rather prodigious rate and, at this point, appear to be going nowhere fast," said Nielsen. "Like the S&L cases, this is a process that will likely take years to play out." 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 actions accounted for 76 percent of the 170 cases filed in the first quarter; however, there were also some atypical plaintiffs entering the subprime litigation scene, such as municipalities like Baltimore and Cleveland. The report found that in 42 percent of the filed 448 cases, 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 York courts. For more information, visit http://www.navigantconsulting.com.