The Subprime Storm is coming

From Reuters:

WASHINGTON, May 28 (Reuters) - The U.S. Securities and Exchange Commission will make public as early as June several enforcement cases involving subprime mortgage-related investigations, two sources familiar with the probes told Reuters on Wednesday.
The SEC last year formed an internal task force to investigate various areas of the subprime mortgage market including sales practices, accounting, the role of credit rating firms and securitization of packaged mortgages.
Many market participants, including credit rating agencies, Wall Street firms and mortgage brokers and lenders, have been criticized for fueling the U.S. housing market, perhaps without disclosing certain risks.
The SEC, which aims to maintain market confidence, is focused on proper disclosure and potential fraudulent activities to investors.
"I think we'll have a few subprime-related cases relatively soon ... within weeks," one source said.

Predatory lenders must prove to be less predatory, more lender

From Sarah Murphy at Bliss PR:

Subprime Lawsuits: How to Defend Yourself
22/05/2008 - 15:02
"The pace of subprime-related litigation continues with no apparent end in sight as more and more lawsuits are filed against mortgage lenders, Wall Street firms that packaged and resold the mortgage loans into bonds and mortgage backed securities (“MBS”), and companies that invested in MBS. Many of the mortgage lender lawsuits are directed at underwriting practices and accounting estimates, including estimates related to allowance for loan losses, valuation of mortgage servicing rights and residual securities, and liabilities for loan repurchases.

What companies can do to defend themselves against these lawsuits depends on how they arrived at their accounting estimates and whether they can demonstrate that good faith efforts were made to determine those estimates based on information available at the time. Anthony Lendez, CPA, CFE, is a partner with BDO Consulting, a division of BDO Seidman, LLP, and can speak to the following best practices for the various defendants of these lawsuits:"