Mortgage Backed Securities Fraud
Undisclosed risks associated with mortgage backed securities with ties to risky subprime mortgages have cost investors more than $1 billion as those securities lost value. According to some reports, up to 35 percent of all mortgage securities issued in 2006 were of the risky sub-prime variety. Yet in this risky mortgage environment, many banks and brokerage firms failed to perform adequate due diligence on mortgage loans before including them in tranches of Collateralized Debt Obligations (CDOs) and other mortgage backed securities.
As a result, many tranches contained risky sub-prime mortgages of questionable and likely overrepresented value. Consequently, investors were misled into investing in illiquid securities closely tied to the doomed sub-prime mortgages. As the foreclosure rate of sub-prime mortgages has soared, the securities tied to them have experienced sharp declines in value resulting in hundreds of billions of dollars in financial losses for the investors.
How Our Houston Business Lawyers Can Help
The fallout from collapsing mortgage backed securities has had a devastating impact on investments that were touted by brokerage firms as being safe, stable investments. Hedge funds and mutual funds that were heavily invested in mortgage backed securities have experienced staggering losses as mortgage backed securities lost their value and became illiquid. By investing so heavily in mortgage backed securities tied to risky subprime mortgages, fund managers were operating at odds with fund objectives thereby misleading their investors who reasonably believed, based on representations made by fund managers, that they were making more conservative investments.
By misleading investors to invest in funds that were much riskier than advertised, fund managers and brokerage houses violated their legal and ethical duties to disclose risks to investors. The result is that many individual and institutional investors have suffered huge financial losses. If you or your business has suffered a devastating financial loss due to mortgage backed securities fraud, call a Houston business attorney from our office today to get a free consultation. Many mortgage backed securities fraud cases, such as the Wachovia Evergreen Ultra Short Opportunities Fund or the Morgan Keegan funds, have opportunities for investors to seek some of the damages.
Read more about these fraudulent claims on the investment fraud page.
Contact a Houston Mortgage Fraud Attorney
If you have suffered a serious financial loss as a result of fraudulently represented securities that had ties to risky subprime mortgages, you may be entitled to recover your losses from those responsible.
Contact a Houston mortgage fraud lawyer from our office today to get the experienced legal help you need.