Appraisal, Modification and Foreclosure Lawsuits Soar

[Eieio]

Appraisal, Modification and Foreclosure Lawsuits Soar

Litigation tied to real estate appraisals, loan modifications and foreclosures leads to spike in mortgage-related lawsuits

Dallas, Aug. 24 — A surge in litigation tied to real estate appraisals, loan modifications and foreclosures contributed to a 54 percent increase in mortgage-related lawsuits, according to the Second Quarter Mortgage Litigation Report from MortgageDaily.com. Investor litigation continued to be the busiest category.


The analysis, based on active cases covered by MortgageDaily.com, was prepared in conjunction with the law firm of Patton Boggs LLP, which is known as a leader for its work in mortgage banking litigation.


During the first quarter, 125 cases were tracked, jumping from an already active 81 first-quarter cases. Second-quarter 2008 actions numbered just 42.


Leading the pack were modification cases – which jumped to 22 from none tracked in the first quarter. Much of the activity was tied to actions against modification firms. The increase in cases coincided with the launch of the Obama administration's Home Affordable Modification program.


Also surging were foreclosure cases, which jumped to 26 actions from just 12.


Investor lawsuits and class actions continued to dominate mortgage-related litigation, rising to 31 cases from 21 in the first quarter. However, as the stock market has recently recovered, third-quarter investor litigation appears to be easing.


Second-quarter appraisal lawsuits increased to 11 from two in the prior period. Appraisal-related activity grew just as the Home Valuation Code of Conduct was implemented.


Tracking consumer litigation cases like those identified by MortgageDaily.com can help companies identify litigation and regulatory trends," stated Pat McManemin with Patton Boggs. "This is a great way for industry members to mitigate against potential risks affecting products and services."


Link

http://www.housingzone.com/probuilder/article/CA6685748.html

[Ed The Roofer]

Many appraisers, due to the lack of activity in their local comfort zones, where their knowledge would have been more well regarded, have been forced to travel further and further to find work to keep themselves afloat.

Now, without a first hand geographic experience factor, their appraisal values are being reputed to be illogically unrealistic.

If anything, due to the litigation and the nation-wide stigma of the former 125% LTV financing previously available, which has now created a significant percentage of "Upside Down" home owners, if anything, their appraised evaluations are more often than not psychologically motivated to not only play it on the safe side, but further towards the Under-Evaluation craze of much of the consumer real=estate being scrutinized currently.

The threat of current and former litigation inherently forces them to be more on the cautious, yet pessimistic side, rather than a truer and more appropriate realistic evaluation.

Once again, this ties into the illogic loan policies which originally loaned more out than the property was worth.

Also, the side affect of this outpouring has been an increase in bankruptcy filings and foreclosures bringing impending doom to so many peoples lives.

Who is at fault more?

The home owner who saw the bonanza of the gift cash from their equity reserves, magnified by an additional 25%, or the lending policies which, due to competition and creative financing packages put together, seemed faced with the, "If I Can't Beat Them, I Will Join Them", mentality to create this subterfuge in the first place.

To remain a viable player in the, At That Time, very profitable mortgage and equity loan industry, there hands were seemingly tied and they must have felt compelled to create their own downward spiral, not realizing that the bottom could and would drop out from under them.

Ed



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