March 30, 2012
Litigation concerning mortgage-backed securities (MBS) is heating up in 2012, as the courts are denying many of the defendants’ motions to dismiss. This is leading to a long and involved discovery process, as both sides will have to examine the mortgage loans underlying the securitizations in great detail.
Typically, the complains in these lawsuits allege:
- The mortgage loan originator did not follow its underwriting guidelines or industry standards
- Appraisals were artificially increased and did not follow industry appraisal standards, resulting in incorrect loan-to-value percentages.
- During securitization, the due diligence process of reviewing mortgages for inclusion in the MBS was flawed or ignored.
- Mortgage terms were modified by servicing organizations and these new terms were not in the best interests of the investors of the MBS.
In order to represent your client effectively, it is critical to select experienced and highly-qualified MBS litigation experts. These experts must have the extensive mortgage underwriting experience to effectively assess the credit decisions made for each mortgage loan in the MBS, as well as determine whether the loan met the underwriting guidelines disclosed in the securitization documents.
This mortgage underwriting expertise takes years to develop and cannot be taught easily or quickly to inexperienced analysts. Navigating through hundreds of pages of mortgage loan documents and determining the issues involved with the mortgages cannot be done by just anyone.
You need an experienced underwriter. There are no shortcuts to developing mortgage underwriting expertise.
2004-2008 was an unprecedented time in mortgage lending, with many different product types and programs being offered to borrowers. While mortgage originators had detailed guidelines, exceptions were often allowed based on a multitude of compensating factors. Without experience with industry-accepted exceptions and compensating factors of that time period, it would be extremely difficult to examine and understand these loans.
Many potential MBS litigation experts were involved in the original underwriting or the due diligence review of the mortgage loans in the MBS. Because many of these allegations suggest fraud or misrepresentation, selecting an MBS expert with a deep understanding of mortgage fraud is vital.
Contact Saponaro, Inc. to help you find the best expert for your MBS litgation needs. Call now at 800-327-3026.