A team of lawyers in Indiana has triggered what some mortgage-industry experts expect to become an explosion of class-action suits by consumers against prominent lenders around the country.

An initial suit challenging adjustable-rate-mortgage computations was filed in U.S. District Court in August. It is expected to be followed by up to 10 additional Indiana suits to be filed in early September.

Lawyers in more than a dozen other states are working with plaintiffs to prepare similar federal class-action suits in their jurisdictions, according to George M. Plews, representing one of the three Indiana law firms functioning as a team.

Among the markets where complaints are on the drawing boards are Virginia, Maryland, the District of Columbia, Florida, Georgia, California, Illinois, Pennsylvania, Mississippi and Alabama.

"This is a nationwide issue," Plews said, "and you're likely to see actions on that scale in the coming months."

The subject of the legal assault: alleged "widespread violations" of federal truth-in-lending and contract law by savings and loans, mortgage bankers and commercial banks in computing borrowers' rates and payments under adjustable-rate mortgages.

The first suit was filed on behalf of three mortgage customers of Bloomington, Ind.-based Workingmens Federal Savings Bank. It charges that the lending institution has "injured" at least 700 of its 1,500 adjustable-rate-mortgage borrowers through "a common pattern of errors" in adjusting ARM rates at regular intervals.

"In many cases," the suit alleges, "{the bank} has computed ARM interest rates based on an index other than the one called for in the mortgage contract, or has used the wrong index value, or has improperly rounded the adjusted interest rate" to its own financial benefit.

ARM customers of the bank "may be unaware of the adjustment errors ... or have sustained damages in such amount that, when taken individually, are too small to justify the expense and effort required to sue separately. Nevertheless, the damages of the class are substantial and justify the taking of legal action."

The suit details the mortgage contracts of each of the three customers, and charges that over a period of as long as six years the bank's rate adjustments on the borrowers' notes were "in excess of that allowed" under the terms of the mortgages.

The federal court filing does not specify the size of the errors or the dollar amounts allegedly overcharged. Plews said that since the suit is a class action, the specifics of the three consumers' histories were subordinate to the larger issue of mass overcharges, which he said totaled large sums.

A spokesman for Workingmens said the bank denies the charges in the complaint and said the lender "will vigorously oppose" the class action in court.

The potential significance of the Indiana federal suits extends well beyond that state. The accuracy of ARM adjustments has become a federal issue, and has caught the eye of bank regulators and Capitol Hill politicians.

The Office of the Comptroller of the Currency recently asked bank examiners to conduct studies of local banks' procedures for adjusting rates as part of upcoming rounds of truth-in-lending compliance reviews.

The comptroller's attention was prompted by charges leveled by a former Federal Savings & Loan Insurance Corp. (FSLIC) employee, who said 50 percent of the 7,000 ARMs made by S&Ls that he examined in the Midwest carried erroneous rate adjustments. John Geddes, now an expert consultant to the Indiana lawyers among others, estimated that national ARM overcharges could amount to a $65 billion liability for the federal government, if not corrected.

Geddes's estimates are disputed by lending industry officials.

At least two U.S senators -- Donald W. Riegle Jr. (D-Mich.), chairman of the Banking Committee, and Richard G. Lugar (R-Ind.) -- have asked federal regulators to immediately probe the overcharge issue. Among their concerns: the possibility that Congress will have to appropriate funds to compensate overcharged ARM customers of insolvent thrifts taken over by the Resolution Trust Corp., the federal S&L rescue agency.

Could your adjustable-rate loan include overcharges? Plews puts the odds at 50-50.

"It's not necessarily the case that your lender is deliberately figuring your rate adjustments incorrectly," he said.

"It's often just poor administration, poor computer programming. I mean look at what the lowest paid department is in just about every banking institution -- the loan servicing department."

Plews's colleague, Henry M. Price, said a key problem is that too many consumers don't believe their bank could do such a thing on their mortgages.

"People have nearly as much faith in their mortgage lender as they do in their family doctor," Price said. "That's a mistake."