New York homeowners filed a class-action lawsuit against 12 of the largest global banks, alleging that manipulation of the London interbank offered rate — or Libor — caused their mortgage payments to increase.
Investors and municipalities brought several class-action suits against the banks regarding Libor manipulation, but this is the first such lawsuit brought by U.S. homeowners, according to The Malaysian Insider.
Annie Bell Adams, a pensioner and one of the five lead plaintiffs in the suit, had her home repossessed after her subprime mortgage was securitized to Libor-based debt and sold off to investors by the banks.
The suit alleges that North American and European banks manipulated Libor to increase the rate and did so on certain dates on which adjustable mortgage interest rates were reset. Homeowners maintain that Libor manipulation caused them to pay more between 2000 and 2009 for mortgages than they should have paid under ordinary circumstances, JD Journal reports.
Banks involved in the lawsuit include Bank of America, Barclays and UBS.
John Sharbrough, the plaintiffs’ Alabama-based attorney, said that the number of plaintiffs could number more than 100,000, adding that many of the homeowners have lost thousands of dollars to Libor manipulation, according to The Malaysian Insider.
Faith in Libor, a key benchmark rate used in more than $300 trillion of derivatives contracts, fell after Barclays was fined by authorities in June for manipulating the rate.
Other banks under investigation in the scandal include Citigroup, Deutsche Bank, JPMorgan Chase, RBS and UBS, Forbes reports.