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Judge OKs $34M Countrywide Reinsurance Settlement

Posted: March 22, 2011
By: Eric Hornbeck
Source: Law360

A Pennsylvania federal judge gave his initial blessing Tuesday to a $34 million settlement of a class action alleging Bank of America Corp.'s Countrywide Financial Corp. paid kickbacks to its reinsurer, CW Reinsurance Co.

Judge Juan R. Sanchez of the U.S. District Court for the Eastern District of Pennsylvania granted preliminary approval to the settlement, which stipulated that the lead class counsel's request for attorneys' fees can't exceed 27.5 percent of the settlement fund.

The class includes all residential mortgage borrowers whose loans closed between December 2005 and December 2008 and were reinsured by Countrywide affiliate CW, formerly known as Balboa Reinsurance Co., according to court documents.

The class alleged that reinsurance premiums that Countrywide paid to CW were actually kickbacks in exchange for referring mortgage insurance business in violation of the Real Estate Settlement Procedures Act. Countrywide and CW both denied any wrongdoing.

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