Annie Bell Adams, who lost her home to foreclosure, and four co-plaintiffs have filed the first class-action suit by homeowners in New York against 12 banks, alleging that LIBOR manipulation made them pay more for their subprime mortgages between 2000 and 2009.
The Financial Times reported Monday that Alabama-based attorney John Sharbrough says that plaintiffs in the suit could number as many as 100,000. The class action alleges that traders at the 12 banks were incentivized to manipulate LIBOR to a higher rate on certain dates, resulting in homeowners having to pay more.
While class action suits have been brought over LIBOR manipulation already, they have been filed by municipalities and investors. Now homeowners are getting into the act. Plaintiffs in this case held LIBOR Plus adjustable-rate mortgages (ARMs). Adams, who was on a pension, and whose subprime mortgage was securitized into LIBOR-based collateralized debt obligations (CDOs) and sold by banks to investors, saw her home go into foreclosure.