A court has granted preliminary approval to a nationwide class action settlement in an action brought by homebuyers against Countrywide Financial Corporation, Countrywide Home Loans and Balboa Reinsurance Company for alleged violations of the Real Estate Settlement Procedures Act. Plaintiffs alleged that defendants engaged in a scheme where a portion of mortgage insurance premiums that mortgage insurers ceded to Countrywide’s affiliated reinsurer, Balboa, were “disguised kickbacks paid for the referral of primary mortgage insurance business.” The court conditionally certified a class defined as: “all borrowers with residential mortgage loans closed on or after December 22, 2005 through December 31, 2008 that were reinsured by Balboa or its subsidiaries, excluding borrowers with residential mortgage loans originated by Countrywide Home Loan’s Correspondence Lending Division or otherwise purchased on the secondary market.” The settlement relief includes payments from a settlement fund of up to $34 million. Payments for class members will be determined based on “an analysis of the number of private mortgage insurance payments made” by each class member. The settlement also includes an award of attorney’s fees and expenses for plaintiffs’ counsel, not to exceed 27.5% of the $34 million settlement fund. A hearing on whether to grant final approval to the settlement is currently set for July 29, 2011. Alston v. Countrywide Financial Corp., Case No. 2:07-cv-03508 (USDC E.D. Pa. March 22, 2011).
This post written by Michael Wolgin.