Mortgage litigation update: Unprecedented expansion of standing doctrine rebuffed by courts

A host of alleged class actions have been filed in federal and state courts across the country recently of behalf of purchasers of second mortgage loans. In these actions, borrowers have sued a variety of entities, including banks, mortgage conduits, and securitization trusts and their trustees, that have purchased, held, or otherwise acquired subordinate lien mortgage loans ("second mortgages") from a number of different originating lenders. In these cases, plaintiffs are seeking to expand standing principles to permit claims against entities with whom the plaintiffs had no contractual relationship. Court after court has reaffirmed the principle that a named plaintiff cannot establish an injury traceable to the conduct of any defendant which does not hold that plaintiff's loan.