Consumers don't have to prove they were overcharged in order to
sue settlement services providers for triple damages under the Real
Estate Settlement Procedures Act (RESPA), a federal court of
appeals has ruled in a precedent-setting decision involving
allegations of "captive reinsurance" of private mortgage insurance
The decision exposes Countrywide Financial Corp. owner Bank of
America to potential damages of nearly $2.7 billion. Countrywide is
accused in a proposed class-action lawsuit of funneling business to
private mortgage insurers who had agreed to reinsure policies with
an affiliated company, Balboa Reinsurance Co.
Several similar cases alleging captive reinsurance schemes by
Washington Mutual, GMAC and Wells Fargo brought by the same
Pennsylvania-based law firm representing consumers in the
Countrywide lawsuit had been stayed pending the appeals court
decision and can now move forward.
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