Subprime Suits Expected to Dwarf S&L Litigation, New Report Suggests
A new report finds that 448 subprime-related cases were filed in federal courts in the 15 months that ended on March 31, a total that is outpacing litigation over the savings and loan crisis.
The study by Navigant Consulting covered suits filed from Jan. 1, 2007, to March 31, 2008, Corporate Counsel reports. During the S&L crisis, a total of 559 suits were filed over a six-year period ending in 1995.
Navigant managing director Jeff Nielsen told Corporate Counsel that in the most recent quarter, the number of suits filed averaged almost two a day, including weekends.
“What we saw in 2007 was a mild breaking wave compared to the tsunami we’re witnessing now,” he said.
Forty-five percent of the suits were borrower class actions that don’t pose a big risk to corporations. Securities cases, which may bring greater exposure, numbered 105 during the 15-month period. Slightly more than half of the securities cases allege securities fraud.
Defendants include lenders that issued subprime mortgages and companies that underwrote or advised on mortgage-backed securities.
