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Mortgage Litigation Activity Hits Record High, Expected To Continue Upward Trend

foreclosureIncreasing foreclosure-related legal cases helped drive the Mortgage Litigation Index to a record high in the fourth quarter of 2011. The index tracked activity for 244 court cases involving mortgage companies — a 12-percent increase from the previous quarter and a 62-percent increase over the same period in 2010, according to online news site MortgageDaily.com.

Litigation is expected to increase in the coming months as consumers, federal regulators and state agencies begin to examine other companies, Notaries and practices that were not bound by the terms of the National Mortgage Settlement, according to Dallas, Texas-based law firm Ballard Spahr analyzing the Index numbers.

“The phenomena that led to the surge in litigation in the fourth quarter of 2011 has intensified in 2012,” noted Ballard Spahr partner Christopher Willis. Willis specifically expects to see more criminal indictments stemming from the “robo-signing” crisis.

Foreclosure cases accounted for more than 40 percent of litigation in the final three months of 2011 — a 123-percent increase over the same period the previous year. In response to the Settlement and other legal and enforcement efforts, many companies are ensuring that their Notary employees and supervisors are trained in proper notarial procedure.

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