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Cities Take Aim at Servicers in Foreclosure Crisis.
New York -- Mayors of cities, most prominently Cleveland and Baltimore, are taking aim at mortgage lenders with lawsuits alleging that the lenders and investment banks that financed loans have contributed to a foreclosure crisis in their cities.
The city of Cleveland has sued 21 lenders and Wall Street firms involved in the subprime mortgage market, seeking monetary damages under a "public nuisance law."
The Cleveland lawsuit alleges that the lenders "financed and cultivated" the subprime market, leading to a foreclosure crisis that has proved costly for the city. While the litigation focuses on ills in the loan origination business, it is servicers and investors who are the target of the litigation.
Bank of America, Citigroup, Deutsche Bank, JPMorgan Chase, Merrill Lynch, Bear Stearns, Ameriquest, Washington Mutual, Countrywide Financial Corp., Morgan Stanley, Wells Fargo, Fremont General Corp., GMAC-RFC, Goldman Sachs, Greenwich Capital Markets, HSBC Holdings, IndyMac Bancorp, Lehman Brothers, Novastar Financial and Option One Mortgage were all named defendants in the Cleveland lawsuit.
While the use of a "public nuisance law" may be an unusual tactic, the Cleveland suit demonstrates the lengths to which cities will go to hold lenders responsible for the rash of foreclosures they are facing.
The city, calling public nuisance "a longstanding, well-established legal concept," said this allows recovery for circumstances created by the defendant that ...
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- Cities Take Aim at Servicers in Foreclosure Crisis.
- News wire article from: Mortgage Line Cornwell, Ted February 20, 2008 700+ words
...contributed to a foreclosure crisis in their cities...market, leading to a foreclosure crisis that has proved costly...Morgan Stanley, Wells Fargo, Fremont General...Baltimore lawsuit targets Wells Fargo Bank, one of the...
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...Who is to blame? So who is to blame for the city's foreclosure crisis, frequently spotlighted in the national media? Cleveland...Merrill Lynch, Morgan Stanley, Washington Mutual and Wells Fargo. In January, the city of Cleveland filed a public nuisance...
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...1.5 times the national average rate, the agency says. Wells Fargo Home Mortgage, the leading mortgage lender in the Portland...pricing," the bank said in a statement. Stephanie Christie, Wells Fargo's senior vice president of nonprime mortgages, will speak...
Source: HighBeam Research, Cities Take Aim at Servicers in Foreclosure Crisis.