Glenfed, Fleet Financial Settle Escrow Suits : Lending: The two were accused of withholding too much money from mortgage customers.

Financial giants Glendale Federal Bank and Fleet Financial Group have settled accusations that they withheld too much money from mortgage customers for tax and insurance payments, attorneys said Wednesday.

The settlements, expected to return more than $90 million to customers, are the latest to result from lawsuits contending that many big lenders required excessive payments into escrow accounts.

On a single mortgage, the excess “can be from tens of dollars to the low thousands,” plaintiff lawyer Daniel Edelman said Wednesday in Montgomery, Ala.

“If you multiply that by a million accounts, it’s hundreds of millions of dollars,” Edelman said.

Charges built into monthly mortgage payments are collected in the escrow accounts, which then pay out real estate taxes and property insurance premiums.

The latest class-action suits, like others filed by Edelman and fellow Chicago lawyer Lawrence Walner, were settled when the lenders agreed to revise formulas so less money is withheld and refund money to some customers.

The settlement by Fleet Mortgage Corp. of Milwaukee and Fleet Real Estate Funding Corp. of Columbia, S.C., will result in the return of up to $85 million from escrow accounts to customers, Walner said in Chicago.

Those mortgage servicers belong to the empire of giant Fleet Financial Group of Providence, R.I., which announced last month that it had agreed to a settlement. It has declined to estimate how much would be refunded.

A spokeswoman for Glendale Federal and its parent company, Glenfed Inc., said letters were mailed last week alerting 157,000 current and past customers that they may qualify for refunds. The savings and loan, which admitted no wrongdoing, expects to refund $6.5 million from escrow accounts.

“We just felt it was in our best interest not to get bogged down in long litigation,” spokeswoman Judy Cunningham said.

A final settlement hearing in the Glenfed case is set for Sept. 25 in Chicago before Cook County Circuit Judge Edward C. Hofert.

Contract language governing escrow accounts varies from state to state and company to company, and there is no indication of a broad conspiracy by lenders, Edelman said. Indeed, he said, some mortgage lenders show no signs of having ever over-collected.

Still, a “great many” companies withheld excessive amounts, Edelman said.

He said many of Fleet’s 1 million mortgages and 400,000 previous mortgages would be affected by the settlement, filed in federal court in Chicago.

The settlements include interest payments on amounts over-withheld.

In 1990, attorneys general from seven states announced the results of an investigation of the mortgage lending practices of four big lenders: Fleet, General Motors Acceptance Corp., Lomas Financial Corp. and Citibank.

After looking at hundreds of loans from each company, the state prosecutors concluded that about two-thirds of their escrow accounts collected too much money.