Fleet Financial Group Inc. is expected to reach a settlement today of a class action that industry observers say could echo loudly through the home lending industry.

At issue is how wholesale lenders pay brokers for loans made at above the market rate, and the settlement could set a precedent for more suits across the country.

Robert E. Eicher, a partner at Williams, Mullen, Christian & Dobbins, a Richmond, Va., law firm representing one of Fleet's co-defendants, said the settlement should be signed after a federal court hearing today. The settlement would award cash compensation to the class, Mr. Eicher said.

The action against a Fleet subsidiary is just the latest in a rash of class suits targeting home lenders.

The action accuses Georgia-based Fleet Finance Inc., Crosstate Mortgage and Investments Inc., Westover Investment Corp., and Sterling Mortgage Corp. of racketeering and fraud in Virginia.

In a strongly worded motion to dismiss the case, lawyers for Fleet and the mortgage brokers said, "At bottom, the plaintiff's claims are rounded in suspicion, speculation, sinister inferences, and ignorance."

The complaint filed by the Central Virginia Legal Aid Society Inc. and the Virginia Poverty Law Center Inc., among others, alleges that the defendants "bilked numerous homeowners of thousands of dollars and homeowners' equity through hidden brokers' fees in connection with mortgage loans."

The lawsuit claims that Fleet and its affiliated mortgage brokers received, in several cases, "broker fees" of many times more than what they disclosed on Truth-in-Lending statements.

Parts of "yield-spread premiums" paid to the brokers are allegedly kickbacks from Fleet, according to the suit. Yield-spread premiums are the portion of income that comes from charging borrowers interest rates above the mortgage bank's lowest rate.

Such premiums violate both Truth-in-Lending regulations and the Racketeering Influenced and Corrupt Organizations Act, or RICO, the lawsuit contends.

"Obviously, people's emotions are charged up when people invoke RICO," said Thomas W. Williamson Jr., a partner in Williamson & Lavecchia, a Richmond law firm representing one of the plaintiffs.

"But you don't have to have your last name ending in a vowel to be named in a RICO case," he said.

Lawyers for Fleet and its co-defendants argued in their motion to dismiss that the class did not include "real world" factors like creditworthiness in their claim. They also contended that premiums are permitted by law.

A source familiar with the case said Fleet's settlement with; the class will reimburse members for the contested fees. Also, the settlement will pay them 0.67% of the loan amount.

Mr. Eicher declined to give details of the settlement pending its signing.

Since 1990, when a group of state attorneys general precipitated a landslide of class actions regarding escrow accounts, mortgage banks have been fending off class after class.

This summer, a new wave of classes began to allege violations of Truth-in-Lending in the listing of courier fees.

But the Fleet case is the first to target mortgage brokers as well as bankers.

"The whole lending industry is under siege," said Mary J. Burt, vice president of the National Association of Mortgage Brokers. "There seems to be an attitude that if you make money you must be crooked. I am afraid it is going to spread."

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