Washington Mutual Inc. has asked a bankruptcy court to shield it from a consumer class action mortgage fraud case, saying that lawyers in 180 other cases are poised to pounce if the lawsuit continues.
Filed in 2005 in a New York federal court, the consumer class action targets alleged improper overcharging by Washington Mutual Bank, a big home lender that regulators seized during the crisis in the mortgage market.
The case is one of many lawsuits linked to Wamu's subprime home lending practices. Court records filed in the parent company's bankruptcy case reflect lawsuits claiming wrongs such as fraud and misrepresentation as well as a case in which the City of Cleveland claimed Wamu's subprime lending exacerbated the plight of the poor and created a public nuisance.
All the cases were held up when Wamu's parent filed for Chapter 11 protection in September 2008.
Consumers in the overcharging class action, however, have asked for bankruptcy court permission to continue their case in an effort to recoup an estimated $5 million in fees Wamu charged for faxes and other ordinary document handling.
