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Financial Services Law Insights and Observations

District Court approves RESPA class action settlement

Courts RESPA Class Action Settlement Kickback RICO Mortgages

Courts

On August 19, the U.S. District Court for the District of Maryland granted preliminary approval of a proposed class action settlement claiming a mortgage company engaged in an allegedly illegal kickback scheme with a title company. According to the memorandum in support of the plaintiffs’ motion for preliminary approval, the title company paid, and the mortgage company received and accepted, kickbacks in exchange for the mortgage company’s “assignment and referral of residential mortgage loans, refinances, and reverse mortgages to [the title company] for title and settlement services.” This conduct, the plaintiffs contended, violated RESPA and RICO. While the mortgage company denied all substantive allegations and liability, the parties reached a proposed settlement, in which class members (defined as borrowers with federal mortgage loans originated by the mortgage company for which the title company provided settlement services) will each receive approximately $3,200 from a $990,000 settlement fund. The preliminarily approved settlement also provides for class counsel fees and expenses and class representative service awards for a total not to exceed roughly $1.27 million.

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