$7.4-Million Settlement in Loan Case OKd

A state appeals court approved a $7.4-million settlement Friday of a suit against Bank of America by thousands of home buyers, whose individual shares will be about $120.

Plaintiffs’ lawyers will get at least $3.5 million in fees, or almost half of the total.

The suit was filed in 1972 to challenge the bank’s refusal to pay interest on impound accounts, the advance payments it collected from buyers to pay property taxes and insurance on property sales the bank was financing.

After a non-jury trial, San Francisco Superior Court Judge John Dearman ruled that federal banking regulations required the bank to keep the impound accounts separate from other funds and pay interest to borrowers.

He awarded $47 million in compensatory damages and $54 million in punitive damages. However, the bank appealed and a settlement was reached last July, while the appeal was pending.

The court said there were 170,000 potential claimants who had bought real estate under trust deeds through the bank before March 21, 1972, and paid impound accounts to the bank between 1968 and 1975. More than 29,000 filed approved claims by a deadline that has now passed.

Of the total, $3.6 million goes to the claimants, giving them an average of just over $120 each. Another $3.5 million goes to the lawyers who filed the class-action suit and the remaining $300,000 pays legal costs.