In the wake of the recession, many homeowners in Texas and beyond saw their mortgages being sold to other creditors. For a majority of homeowners, there was plenty of confusion surrounding the buyout of their debt. Homeowners began asking the all important question: what will this mean for me in the long-run? Investors had a question of their own though: how much return will I really see in my investment?
Recent lawsuits seem to have answered these questions as investors file suits against the original bank lenders for "misleading investors about the securities' risks" on mortgages that didn't pay out as much as they had hoped for. In several cases across the states, district court judges have been ruling in favor of investors who are attempting to recoup some of their losses caused by the housing market slump in 2007.
But many bank lenders, such as the Goldman Sachs Group Inc, are urging the U.S. Supreme Court to throw out many of the mortgage securities class-action lawsuits stating that many of the district court's decisions are in direct conflict with one another.
As one attorney close to the securities litigation cases points out, the discrepancies being created by the district courts could cost other investors thousands of dollars in potential liability in the future. With contradictory rulings, investors facing similar situations may not be able to adequately defend themselves in court. In cases of investment firms just starting out, these cases make it nearly impossible to follow state and federal regulations because of the confusion these cases have presented.
Goldman Sachs hopes that the split among federal courts will increase the chances that the Supreme Court will accept an appeal, though no decision is likely to be made before the middle of 2013.
Source: Thomson Reuters News & Insight, "Goldman urges Supreme Court to end mortgage class-action," Jonathan Stempel, Nov. 2, 2012