Bernstein Litowitz Berger & Grossmann filed three suits Thursday that could be the beginning of a whole new, and huge, wave of litigation against the U.S. banks that issued mortgage-backed securities. One complaint is for Landesbank Baden-Wurttemberg, asserting losses on $500 million in Bear Stearns MBS. The others were filed for Sealink and allege losses on $1.6 billion in Bank of America MBS and on $2.4 billion in Bear Stearns MBS. Sealink is an Irish corporation, but it was set up to hold MBS owned by the German bank Sachsen, according to the complaint.

So all three suits are really on behalf of German MBS investors, and they're the first straight MBS fraud suits to be filed. (There have been previous Landesbank suits involving CDOs.) That's hugely significant because German investors have experience tens of billions of dollars in MBS losses. An article in Der Spiegel in April of 2008 estimated that German losses as a result of the U.S. subprime mortgage crisis were already 30 billion euros, and mounting. A National Mortgage News article last January said German and other foreign investors own hundreds of billions of dollars in U.S. mortgage-backed securities.

Bernstein Litowitz, meanwhile, is advising more than a half-dozen additional German institutions on potential MBS suits, which means that Thursday's three complaints are probably not the last we'll see on behalf of German investors -- particularly because Bernstein has already assembled so much evidence of the conduct of MBS issuers for the securities suits they've filed on behalf of U.S. investors.

With the clock ticking on MBS securities claims, it looks like the sleeping giant of German exposure may have finally awakened.

(Reporting by Alison Frankel)

Follow Alison on Twitter: @AlisonFrankel 

Follow us on Twitter: @ReutersLegal