The Subprime Litigation Tsunami: Are We Dealing with Case Overload?
Saturday, May 10, 2008
The number of subprime-related lawsuits filed in federal court during the first quarter of 2008 is on pace to outdo subprime-related litigation figures from last year, as well as the number of federal lawsuits filed in the early 1990s after the tumultuous Savings-and-Loan scandal, according to a new report from global consulting firm Navigant Consulting, Inc.
In its latest report on subprime-related litigation, Navigant Consulting, Inc., found that 170 federal lawsuits related to the subprime crisis were filed during the first quarter of 2008—a statistic that is 85-percent higher than the busiest quarter on record (September of 2007) and troubling when considering the first three months of 2008 are close to matching the 181 cases filed during the final six months of last year.
For the 15-month period ending March 31, 2008, the tally of subprime-related federal lawsuits stood at 448, compared to 278 cases last year.
Navigant refers to this influx of new subprime-related lawsuits in 2008 as a litigation “tsunami” that is moving at a rapid pace and threatening to outdo the entire Savings and Loan Scandal, which spawned 559 lawsuits in the early 1990s.
“The cases are piling up at a rather prodigious rate and, at this point, appear to be going nowhere fast,” said Jeff Nielsen, managing director of Navigant Consulting. “Like the S&L cases, this is a process that will likely take years to play out.”
Borrower class action lawsuits made up the majority (46-percent) of the subprime-related cases filed this year, followed by securities cases (10-percent) and commercial contract disputes (10-percent). Navigant breaks these numbers down even further, showing that 42-percent of the borrower-class action lawsuits filed in the first quarter involved some type of dispute related to “disclosures” made during loan origination.
Navigant also examined 'what type of defendants' were named in the cases and concluded that 57-percent of the lawsuits filed in the first quarter involved at least one Fortune 1000 company and 10-percent of the cases recorded in the last 15 months named at least one non-U.S. financial institution as a defendant.
About half of the cases filed during the first quarter of this year originated in the states of New York and California, Navigant concluded in its report.
In its latest report on subprime-related litigation, Navigant Consulting, Inc., found that 170 federal lawsuits related to the subprime crisis were filed during the first quarter of 2008—a statistic that is 85-percent higher than the busiest quarter on record (September of 2007) and troubling when considering the first three months of 2008 are close to matching the 181 cases filed during the final six months of last year.
For the 15-month period ending March 31, 2008, the tally of subprime-related federal lawsuits stood at 448, compared to 278 cases last year.
Navigant refers to this influx of new subprime-related lawsuits in 2008 as a litigation “tsunami” that is moving at a rapid pace and threatening to outdo the entire Savings and Loan Scandal, which spawned 559 lawsuits in the early 1990s.
“The cases are piling up at a rather prodigious rate and, at this point, appear to be going nowhere fast,” said Jeff Nielsen, managing director of Navigant Consulting. “Like the S&L cases, this is a process that will likely take years to play out.”
Borrower class action lawsuits made up the majority (46-percent) of the subprime-related cases filed this year, followed by securities cases (10-percent) and commercial contract disputes (10-percent). Navigant breaks these numbers down even further, showing that 42-percent of the borrower-class action lawsuits filed in the first quarter involved some type of dispute related to “disclosures” made during loan origination.
Navigant also examined 'what type of defendants' were named in the cases and concluded that 57-percent of the lawsuits filed in the first quarter involved at least one Fortune 1000 company and 10-percent of the cases recorded in the last 15 months named at least one non-U.S. financial institution as a defendant.
About half of the cases filed during the first quarter of this year originated in the states of New York and California, Navigant concluded in its report.
