A San Francisco-base mortgage servicer has agreed to a settlement of a class-action lawsuit dealing with alleged overescrowing under Respa that will provide members of the class with a de minimus refund.
The agreement by First Nationwide Bank is subject to final approval at a hearing scheduled for next month before Judge Eduardo C. Robreno in federal district court in Philadelphia.
The suit is one of 90 nationwide dealing with alleged over-escrowing by mortgage services. Settlements are being negotiated or are pending with Lomas & Nettleton, General Motors Acceptance Corp., Fleet Mortgage Corp. and Citibank, among others.
To settle Michael and Erna Lake, et al, vs. First Nationwide Bank, Docket No. 93-21, First Nationwide agreed to pay no more than $166,771 to those with open mortgage accounts with the institution and a maximum of $10,000 to holders of closed accounts.
Given that there are a maximum of 25,000 members of the class, that would mean each member would get a maximum of $7.07 if all members of the class respond.
The Lakes will receive an additional $2,000 as first claimant, a common policy in settlements of class action litigation according to industry lawyers.
The class members will receive the maximum if there was more than a one-month cushion in the escrow account, according to court documents. If so,they will receive interest at 4% per annum on the overage for the years 1990-92. First Nationwide has also agreed to maintain only a one-month cushion in escrow accounts in the future. Those with closed accounts will be refunded under the same system, the court documents.
Court documents list Arthur Newbold and Frances N. Ryan of Dechert, Price & Rhoads of Philadelphia as local counsel and Alan N. Salpeter of Meyer, Brown & Platt in Chicago as overall counsel for First Nationwide.
Barry Leed of Minneapolis is listed as chief plaintiff counsel in the case. The documents said Leed and associate ate counsel in Pennsylvania have agreed to a total of $110,000 to cover all fees and costs in the case.