As reported by Law360 (subscription), Bank of America North America has agreed to pay $35 million to settle a borrower class action lawsuit accusing the company of failing to comply with a California law requiring banks to pay interest on mortgage escrow accounts.
The settlement, originally announced in October, amounts to almost 75% of the escrow interest BofA allegedly failed to pay California borrowers, and as noted by Law360 “would resolve a years-old case that raised questions about national bank preemption powers and nearly reached the U.S. Supreme Court.”
As plaintiffs’ counsel noted, “In negotiating the settlement, the parties and their counsel were well informed about the issues, the relative strengths and weaknesses of their respective positions, and about the risks faced by each side of continued litigation.”
The settlement filing notes that Bank of America has already enacted changes to its policies and practices, and in 2019 began paying escrow interest to all residential mortgage escrow accounts in California.
For more information on the California Unpaid Mortgage Interest Litigation, click here.