Just as the housing market is showing signs of recovery, major banks around the country are now facing a rash of mortgage securities litigation that could total $300 billion if they lose in court. The lawsuits filed by investors, insurers, regulators, and prosecutors claim the banks sold bad mortgage securities. Investors seek to force the banks to repurchase the shoddy loans.

Ballard Spahr consumer financial services partner Christopher J. Willis stated: "We are at an all-time high for this mortgage litigation."

Last year, the Federal Housing Finance Agency filed a $200 billion suit against 17 banks, alleging they duped Fannie Mae and Freddie Mac into purchasing securities of questionable value. The outcome of this litigation is expected to have a far-reaching effect on banks' ability to minimize their losses.

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