Contimortgage Corp. an-nounced Friday that courts had approved a preliminary settlement agreement for a class action brought against the company in last year.
The suit alleged that the Horsham, Pa.-based lender wrongfully paid broker premiums and charged excessive satisfaction fees.
Contimortgage will pay about $670,000 to borrowers, according to the agreement filed with the U.S. District Court for Massachusetts.
Plaintiffs' lawyers have filed more than a dozen class actions related to payments to brokers in the past two years.
These suits hinge on interpretations of the Real Estate Settlement Procedures Act. The Department of Housing and Urban Development is in the process of refining the rules under the act, known as Respa. Members of Congress recently introduced legislation to put a moratorium on such suits until the rule is clearly defined.
"Whether we were right or wrong is still a gray area," said Jerry Perelson, spokesman for Contifinancial, Contimortgage's New York-based parent. "You do what you have to do to get rid of the litigation."
The $670,000 was fully reserved in ContiMortgage's last fiscal year, said Robert Major, president and chief executive in a written statement. - Heather Timmons