The law firm that won a class-action settlement this month for up to $50 million from Ameriquest Mortgage Co. has now set its sights on Countrywide Financial Corp.
Two consumers represented by Cotchett, Pitre, Simon & McCarthy filed a lawsuit against Countrywide last week in the same venue where the Ameriquest suit was filed — the California Superior Court in San Mateo.
The Countrywide suit seeks class-action status. The plaintiffs did not say how much they were seeking in damages.
The charges are similar to those in the Ameriquest suit. Countrywide is accused of engaging in a “scheme of unfair, unlawful and/or deceptive business practices,” and of committing fraud, misrepresentation, and “unjust enrichment” on prime and subprime home equity loans in California beginning in March 2002.
Countrywide officials would not discuss the suit.
The March 14 complaint alleges that Countrywide loan officers in northern California failed to disclose over $600 of settlement fees to one borrower on a $50,000 home equity line of credit.
According to the suit, Countrywide “aggressively solicited” another borrower “to refinance her loan — a practice known as ‘flipping’ — where the sole purpose of the transaction is to add in other debts and pile on new costs and new origination fees.” That borrower showed up at the closing table to learn for the first time that she owed $1,146 of fees to Countrywide, the complaint says.
Federal law requires lenders to provide a good-faith estimate of closing fees within three days of the application. The complaint says that neither plaintiff received such a statement for months after applying, and that the estimate they did receive was for “$0 to $2,500,” which the plaintiffs argue was not in good faith.
Because they did not receive disclosures promptly, the suit says, the consumers could not shop for better rates and terms. The suit also accuses Countrywide of failing to disclose prepayment penalties to the borrowers.
The suit that Ameriquest settled was certified as a class action in 2001. In the settlement agreement approved March 4, Ameriquest admitted no wrongdoing but guaranteed it would pay borrowers at least $15 million, plus attorneys’ fees.
Ameriquest agreed to maintain the best practices it adopted in 2003 and 2004 and will make refunds for allegedly failing to disclose prepayment penalties and monthly payments for property taxes and insurance. It will also compensate borrowers for rate increases that allegedly took place between the final disclosures to borrowers and their closings.
The class of roughly 62,000 members included residents of California, Alaska, Texas, and Alabama.
