Five years after the financial crisis, the first wave of lawsuits filed by investors seeking to recover losses on MBS is still slogging its way through the courts, and, for many, the clock is ticking. The bulk of cases to date were brought under federal securities law; most were filed in 2007 and 2008 and face a two-part statute of limitations: one year from discovery and three years from the date of issuance of the securities.

Despite a few settlements, such as one for Wells Fargo for $125 million in July of 2011, another for $40 million by Lehman Brothers in October 2011 and another for $315 million by Bank of America on behalf of Merrill Lynch in December 2011, banks and other defendants have been whittling down their potential exposure to claims significantly by exploiting legal technicalities.

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