A surge in litigation tied to real estate appraisals, loan modifications, and foreclosures contributed to a 54 percent increase in mortgage-related lawsuits in the second quarter, according to a study by the D.C.-based mortgage banking litigation firm Patton Boggs LLP. The analysis revealed a flurry of activity tied to investor litigation. During the second quarter of the year, 125 mortgage-related cases were tracked, jumping from 81 cases in the first quarter. By comparison, second quarter 2008 actions numbered just 42.

Leading the pack were modification cases — which jumped to 22 from none tracked in the first quarter. Much of the activity was tied to actions against modification firms. The report noted that the increase in cases coincided with the launch of the Obama administration’s Home Affordable Modification Program. Also burgeoning were foreclosure cases, which jumped to 26 actions from just 12. Investor lawsuits and class actions continued to dominate mortgage-related litigation, rising to 31 cases from 21 in the first quarter. However, as the stock market has recently recovered, Patton Boggs said third quarter investor litigation appears to be easing. Appraisal lawsuits in the second quarter increased to 11, up from two in the prior period. Appraisal-related activity grew just as the GSEs implemented their new Home Valuation Code of Conduct (HVCC). According to Pat McManemin with Patton Boggs, tracking consumer litigation cases can help mortgage companies identify litigation and regulatory trends. “This is a great way for industry members to mitigate against potential risks affecting products and services,” McManemin said.