Countrywide Offers to Settle Billing Lawsuit
Plaintiffs’ lawyers and Countrywide Home Loans Inc. have offered to settle a class-action lawsuit that accuses the national lender of overbilling consumers for credit reports required to secure mortgages.
Thousands of customers who obtained a first mortgage between July 1996 and April 2002 recently received proposed terms through the mail. Calabasas-based Countrywide denied any wrongdoing in the letter and declined to comment further Wednesday.
A Tarzana lawyer who is part of the suit as a borrower called the proposal inadequate. “It provides nothing of value for the class members,” Howard Strong said, “and they’re being asked to give up their legal rights against Countrywide, in essence, for nothing.”
Under the proposed settlement, the company would pay $7.50 to more than 5,419 borrowers who may have been overcharged while getting a loan at a branch office in Brea. In addition, 264,000 consumers would receive a $35 coupon that could be used for a one-time discount to obtain or refinance a home loan through Countrywide.
The settlement could cost Countrywide more than $9 million if every consumer cashed in the discount. But analysts said that historically such certificates have been redeemed in small numbers.
“They usually get tossed out as junk mail,” said Khalid Elhassan of Trial Lawyers for Public Justice, a group that advocates for civil and consumer rights
Countrywide also agreed to follow several measures for two years, including charging California customers the actual cost to the company for credit reports.
A final hearing to determine the proposal’s merits has been scheduled for Sept. 11 in Los Angeles County Superior Court.
Countrywide’s parent, Countrywide Credit Industries Inc., reported strong second-quarter earnings Wednesday.
Falling mortgage rates boosted home sales and refinancings enough to lift net income 55% to $190.9 million, or $1.48 a share, from a year earlier. Revenue rose 45% to $998.3 million. The company expects to exceed analysts’ estimates in the next two quarters.
Shares of Countrywide rose $3.47 to $43.04 on the New York Stock Exchange, their biggest gain in more than two years.
