Background
Named Plaintiffs Kyle Liguori and Tammy Hoffman filed this lawsuit, Liguori, et al. v. Wells Fargo & Company, et al., No. 2:08-cv-00479-PD (E.D. Pa.), in the United States District Court for the Eastern District of Pennsylvania, naming Wells Fargo & Company, Wells Fargo Bank, N. A. (together “Wells Fargo”) and North Star Mortgage Guaranty Reinsurance Company (“North Star”) as defendants (collectively, “Defendants”). The Action was filed as a proposed class action.
Named Plaintiffs obtained mortgage loans secured by residential real property, which required Private Mortgage Insurance (“PMI”) that was reinsured by Defendant North Star. Plaintiffs allege that Defendants entered into “captive reinsurance arrangements” for the purpose of receiving kickbacks, referral payments and unearned fee splits (disguised as “reinsurance” premiums) from private mortgage insurers to whom Wells Fargo referred borrowers, in violation of Sections 8(a) and (b) of RESPA, 12 U.S.C. §§ 2607(a) and (b). Plaintiffs allege that these captive reinsurance arrangements were created for the primary purpose of facilitating kickbacks and “naked” referral payments prohibited by RESPA and, secondarily, to guarantee a steady stream of business for the seven private mortgage insurance companies (collectively, the “MI Providers”) that provided practically all of the nation’s PMI during the relevant time period. Plaintiffs argue that North Star, the Wells Fargo-affiliated reinsurer, assumed no, or very little, real risk under the contracts and, therefore, did not provide real or commensurately priced reinsurance.
Defendants dispute the Named Plaintiffs’ contentions and assert that they entered into bona fide reinsurance agreements—as evidenced by the reinsurer’s substantial payments on claims as well as projections of significant, further claim payments under the reinsurance contracts.
The Court has made no determination as to the validity of the Named Plaintiffs’ claims or the Defendants’ defenses.
On August 31, 2012, the Court entered an Order preliminarily approving the Settlement Agreement, preliminarily certifying a class and appointing the Named Plaintiffs as class representatives for settlement purposes only, appointing Kessler Topaz Meltzer & Check, LLP as Lead Class Counsel and Bransom, Plutzik, Mahler Birkhaeuser, LLP, Berke, Berke & Berke, and Travis, Calhoun & Conlon as Class Counsel (collectively, “Plaintiffs’ Counsel”), approving the form and manner of class notice, and setting a date for a Final Approval Hearing on January 28, 2013.
On February 7, 2013, the Court entered an Order, approving Plaintiffs’ Unopposed Motion for Final Approval of Class Action Settlement, Certification of Settlement Class, Approval of Plan of Allocation, Appointment of Class Representatives and Appointment of Lead Class Counsel and Class Counsel (the “Final Approval Order”).
The initial distribution to eligible Class members took place on April 23, 2013.