Yesterday, hundreds of staff from the beleaguered studio behind Kingdoms of Amalur: Reckoning were laid off. Today, if the latest reports are to be believed, things have got much, much worse.

Apparently, some of the employees from ex-baseball star Curt Schilling’s 38 Studios have been informed by banks that the homes they thought had been sold to the company have remained in their name. 

That means that not only have they lost their job, they’re also unknowingly defaulting on a mortgage the were assured they no longer had. Unpaid mortgages can lead to personal bankruptcy and homelessness. 

It’s being speculated that those involved with 38 Studios’ relocation program are the victims. While moving from Massachusetts to Rhode Island, 38 Studios offered to buy their employee’s old homes to make the process of relocation a little quicker and easier. Except it would seem that didn’t happen.

Or, at least, it didn’t happen in the way that employees had been led to believe. Instead it’s being suggested that 38 Studios did not buy the homes from those employees at all.

While much of the story is yet to be fleshed out, Polygon are claiming that “several sources” have confirmed that they’ve received massages from their banks asking why their old mortgages have not been payed.

Further questions have also been raised regarding the legality of 38 Studios’ use of state money. The company has received significant investment from Rhode Island itself, money that you are not legally allowed to spend on financing homes or paying mortgages.

38 Studios are also facing accusations from Gov. Lincoln Chafee that because they didn’t alert the state ahead of time about the company’s 379 layoffs, the company is once more in default on the loan agreement with Rhode Island.

Whatever the outcome, expect this story to run for some time. It seems increasingly likely that alongside the continuing case between West/Zampella and Activision, this year’s biggest headlines will be more about courts than consoles.