What Now? - Sub-prime Mortgage Repurchasing Demands Likely to Spur Litigation


The collapse of the sub-prime residential real estate mortgage market has had significant economic impact and is likely to spawn a litigation tsunami. Some of the most severe impacts have arisen from demands that sellers of sub-prime loans repurchase them after they have lost their value.

While many contracts give purchasers an apparent right to demand loans be repurchased under certain conditions, there is a significant question as to whether a purchaser who released guidelines to the point of elimination any verification of a borrower's financial condition can nevertheless insist on repurchase when the borrowers' representations of their financial conditions turn out to be untrue.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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