Court preliminarily approves $11.2 million settlement for post-payment interest charges on FHA mortgages
On July 5, the U.S. District Court for the Southern District of Iowa preliminarily approved a $11.2 million settlement in a proposed class action against a national bank for allegedly improperly charging interest on pre-paid FHA-insured mortgages. According to the complaint filed in 2016, the bank charged post-payment interest on FHA-insured mortgages without providing the proper disclosures required by FHA. Specifically, the complaint alleges that the bank did not use the FHA-approved form to provide the disclosures to consumers. The settlement requires the bank to place $11.2 million in an escrow account for class distributions; settlement expenses; and attorneys’ fees, which, according to settlement documents, will not exceed 28 percent. The court found that the settlement fell “within the range of reasonableness” and met the requirements for preliminary approval.