Foreclosure-Related Federal Lawsuits Against Lenders Skyrocket In California; Reflect Borrowers' Difficulty In Getting Loan Modifications

In San Jose, California, the San Jose Mercury News reports:

• In the last five years, the number of foreclosure lawsuits filed in federal court in California has ballooned — like an exploding adjustable-rate mortgage — from only 29 statewide in 2005 to nearly 1,400 last year. Many such lawsuits also are filed in state courts, which don't track the numbers or the outcomes.

• The striking increase in suits against lenders reflects the difficulty many with underwater mortgages are having in getting loan modifications, either through the government program or the banks themselves.

***

• Some suits contend the lender reneged on a promise of a loan modification, [...]. Others argue lenders screwed up the foreclosure process. Among the most frequent claims: During the overheated housing boom, the bank did not properly disclose the terms of the loan, the borrower never really qualified, but got a loan anyhow.

For more, see Increasing numbers of Californians are suing lenders to avoid foreclosures.