Congressional Bank’s Settlement Over Alleged Kickback Scheme Class Action Lawsuit
Congressional Bank has agreed to pay consumers $2.8 million to settle a class-action lawsuit alleging that American Bank, which it bought in 2016, engaged in a kickback scheme involving a mortgage servicing company that resulted in consumers paying higher rates.
Timothy Ekstrom et al. v. Congressional Bank
Although the Maryland-based mortgage lender had no link to American Bank throughout the company’s alleged kickback scheme involving mortgage servicer All Star Inc., which ran from 2009 to 2011, the Maryland-based Congressional Bank agreed to the settlement to avoid further litigation.
According to the American Bank’s Kickback class-action lawsuit, All Star Inc. paid kickbacks to the bank in return for borrower referrals, resulting in increased title and settlement fees for borrowers.
Timothy Ekstrom and Davida Carnahan have petitioned Maryland Magistrate Judge Beth Gesner to approve the settlement agreement, which would provide Class Members with up to $3,000 each.
Congressional Bank General Counsel Anne Balcer indicated that previous to being identified as a defendant, Congressional Bank was unaware of the kickback scheme alleged throughout the American Bank’s Kickback class-action lawsuit.
In addition, Balcer asserts that all of American Bank’s alleged wrongdoing occurred from 2009 – 2011. None of the employees or management of American Bank who are alleged to have violated the Real Estate Settlement Procedures Act are employed by Congressional Bank.
As laid forth in the request to approve the settlement, Congressional Bank chose to settle this litigation.
Timothy Ekstrom’s Settlement With Congressional Bank, 2021
According to the agreement, Congressional Bank will settle the claim without making any express or implied acknowledgment of fact or liability.
$2.6 million of the total $2.8 million will be distributed to the Class, while $250,000 will be used to fund attorney fees as well as other administrative charges.
At the moment, 805 possible Class Members have been identified, and borrowers will get a pro-rata part of the fund, which is expected to total more than $3,000 per person.
The motion for approval states that in most cases, this amount exceeds the kickbacks received on the Settlement Class members’ subject transaction or the higher costs incurred as a result of the behavior alleged in the Complaint.
Editor’s Note on Congressional Bank Kickback Settlement 2021:
This article is written to inform you of the class action settlement against Congressional Bank over the alleged kickback scheme concerning American Bank.
Case Name & No.: Timothy Ekstrom et al. v. Congressional Bank, Case No. 1:20-cv-01501
Jurisdiction: U.S. District Court – District of Maryland, Northern Division
Products/Services: Consumer Credit
Allegations: Congressional Bank allegedly engaged in a kickback scheme to its consumers with All Star Inc., a mortgage servicing company
Status: To be settled
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