ContiMortgage Corporation Settles Class Action Suit

Business Wire, April 18, 1997

HORSHAM, Pa.--(BUSINESS WIRE)--April 18, 1997--ContiMortgage Corporation announced today that the United States District Court for the District of Massachusetts has preliminarily approved a settlement of a class action lawsuit which alleged that it wrongfully paid broker premiums and charged satisfaction fees in excess of actual recording fees incurred in connection with the payment of borrowers' loans.

Robert A. Major, President and CEO of ContiMortgage, which is the nation's third largest volume producer of B and C home equity loans, said "The settlement is for approximately $670,000, all of which was fully reserved in our last fiscal year." ContiMortgage, which voluntarily ceased paying points to brokers in July 1995, did not admit liability pursuant to the settlement. According to Major, "ContiMortgage agreed to the settlement in order to avoid the cost of litigation and the time associated with defending such litigation."

In the suit, plaintiffs sought statutory damages, actual damages, treble damages, attorneys' fees and rescission of their loans. The broker premium claims asserted by plaintiffs are similar to those made against other lenders such as Ford Consumer Finance Company and GE Capital, both of which have also settled their suits with plaintiffs.

The settlement of the broker premium claim is based on a formula depending on the number of points paid. The settlement of the satisfaction fee claims involves the return of a percentage of the satisfaction fees net of actual recording fees.

ContiMortgage is represented in the suit by Clyde A. Szuch and Joy Harmon Sperling from the law firm of Pitney, Hardin, Kipp & Szuch, Morristown, New Jersey and James B. Fox of the Boston law firm of Bernkopf, Goodman & Baseman. A final hearing to approve the settlement has been scheduled for July 16, 1997.

CONTACT: Pitney, Hardin, Kipp & Szuch

Clyde A. Szuch, 201/966-6300