Real Estate/Title Litigation
One of the most significant problems in real estate today is subprime mortgage litigation. Subprime mortgage litigation has taken a front seat to the more traditional litigated real estate matters of defect concealment, commission disputes, boundary disputes, easement claims, etc.
As has been well documented in the media, appreciation in the real estate market created a window for a significant easing of lending standards and creative financing. Companies that engaged in the practice received awards from low income advocates, lauding the aggressiveness in lowering qualifying standards, and structuring low end payments in the initial periods so that people who otherwise would not qualify to purchase real property could attain a piece of the American dream. As long as property values continued to increase, subprime borrowers realized increasing equity and could look forward to refinancing options.
Everyone benefited. Borrowers moved into houses they otherwise could not have afforded and started building equity, sellers enjoyed the prices of a rising market, real estate agents and brokers made deals, appraisers made a fee, mortgage brokers and lenders made loans, private mortgage insurers made premiums, lenders were able to package and market the loans to financial markets, insurers made premiums for insuring the risk on a percentage of the loan packages, investors were satisfied with the returns on the packaged mortgages, and the economy benefited from the increased prices and demand for real estate.
Every entity involved assumed that property values would simply continue to increase and make the system work. When property values leveled off and then began to drop, the risk that all parties assumed hit home. Suddenly a system that had been almost uniformly praised as reducing barriers of home ownership for lower income Americans became a system of "predatory lenders" taking advantage of the poor who did not understand the risk of a falling market even though they signed Truth in Lending forms and other documents specifically stating what would happen with future payments.
The defense of borrower claims must focus on the inherent market risk assumed by all parties as well as any misrepresentations made by the borrower. These cases are brought by mortgagee attorneys who base their entire case on the "duped homebuyer" assumption, arguing that their clients were unable to understand that their payments would be going up in the future as stated in the documents they were signing. Moreover, many borrowers made misrepresentations to lenders in the application process. This must be appropriately demonstrated to juries. In many cases, without absent misrepresentations made in the application process and the availability of subprime credit, subprime borrowers would still be renters today. All of these theories must be addressed in discovery and carefully explained to jurors, along with the reality that lenders and investors did not want these loans to go bad either. Loan origination money is minor compared to the interest received over the life of a mortgage.
Importantly, it is critical for all defendants in any case to sever and or defer any cross actions between them. Any disputes between defendant groups simply dilutes the main message that needs to be conveyed to jurors, which is that all parties to these transactions assumed the benefits of a rising market along with the risks of a declining market.
Title Insurance Litigation
The firm handles all forms of title insurance litigation arising in both the residential and commercial context, ranging from a variety of claims against title to significant property boundary disputes. Cost-effective representation is again the hallmark of our practice and we are very sensitive to matching defense dollars spent to exposure.