Door Could Open to Class Actions

Washington Post (02/27/08) P. D1; Cho, David
The attorney for a Wisconsin couple that is suing Chevy Chase Bank says a federal appeals court is ready to issue a ruling on whether other borrowers can join their suit to get their mortgages cancelled due to mistakes in their loan documents--no matter how minor. "The case was somewhat interesting a couple years ago when it started, but its ramifications and impact have completely changed given the current environment," says Louis Pizante, chief executive of Mavent, a provider of consumer protection law services to major lenders. Some mortgage analysts and lawyers believe that allowing plaintiffs to file class-action suits will make it easier and more affordable for homeowners to seek mortgage cancellations or rescissions. Approximately 83 percent of federally supervised banks that issued mortgages at the height of the housing boom in 2005 have been cited for "significant compliance violations," according to the inspector general for the Federal Deposit Insurance Corp.