If you thought we were finally done with indemnification litigation focused on residential mortgages originated before the financial crisis of 2007-2008, think again. Over the past year, the Federal Deposit Insurance Corporation (FDIC) as receiver for Washington Mutual Bank has filed six lawsuits against individual mortgage companies and mortgage brokers in the U.S. Court for the Central District of California. The suits are about loans those companies brokered to Washington Mutual Bank and/or its subsidiaries, including Long Beach Mortgage Company (collectively, WaMu). The FDIC-R (FDIC as Receiver) claims that the brokered loans contained “inaccurate or incomplete loan applications or other documentation,” resulting in losses to the FDIC-R. The FDIC-R has threatened many more lawsuits, against entities to which it sent demand letters months or years ago.
