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Subprime Mortgage Meltdown: Is Litigation on its Way? Part II

June 04, 2007

By Keith W. Miller and Matthew R. Paul

We previously wrote regarding the types of claims warehouse lenders and mortgage-backed securities issuers and underwriters could face as a result of the recent meltdown of the subprime mortgage sector. (See Paul Hastings Client Alert, Subprime Mortgage Meltdown: Is Litigation on its Way?) In addition to understanding the potential exposure as a defendant in subprime mortgage-related litigation, investment banks that have purchased subprime mortgage loans directly from mortgage originators should also evaluate and consider potential claims against nonperforming mortgage originators or sellers. A series of recent lawsuits filed by a number of investment banks against various mortgage originators could foretell more widespread litigation of this type.