Class Action Suit Filed Against 12 Major Banks by Homeowners over Libor Manipulation

On Monday, the Financial Times reported that homeowners in New York have filed a class action suit against 12 major banks claiming that Libor manipulation made mortgage repayments costlier than they should have been under ordinary circumstances. While other class action suits have been brought against the banks concerning Libor manipulations by investors and municipalities, this is the first such class action brought by homeowners.

One of the lead plaintiffs in the lawsuit, Annie Bell Adams, is a pensioner who had her home repossessed as her subprime mortgage was securitized to Libor-based debt obligations, and then sold off by the banks to investors.

The lawsuit by the homeowners alleges that banks in North America and Europe manipulated the London interbank rate and made it higher on particular dates on which adjustable mortgage interest rates were reset. The Libor manipulations by banks led to homeowners paying more between 2000 and 2009 than they should have been paying. The defendants include Bank of America, UBS, and Barclays.

The FT quoted the attorney of the class action saying that the plaintiffs could ultimately number more than 100,000 and most of them have lost thousands of dollars due to Libor manipulation by banks. Each of the plaintiffs claims to have lost thousands of dollars on mortgage repayments due to Libor manipulations.

Barclays was fined in June by regulatory authorities for manipulating the Libor interest rate system, while other banks continue to face probes.