As reported by Law360 (subscription), JPMorgan Chase Bank has agreed to pay $11.5 million to settle a lawsuit filed by Lieff Cabraser and co-counsel on behalf of a proposed class of homeowners’ alleging that the banking giant failed to pay interest on funds held in escrow for mortgages as required by New York state law.
In a motion filed Friday in federal court that seeks preliminary approval of the settlement deal, plaintiffs told U.S. District Judge Rachel P. Kovner and U.S. Magistrate Judge Lois Bloom of New York’s Eastern District that the settlement results from “hard fought” negotiations held over several months, and that the proposed settlement represents “fair, reasonable and adequate consideration to the settlement class, while entirely mitigating the litigation risk.”
The suit was filed in January 2020, and accused Chase of breach of contract and violation of New York’s general obligations and business laws. The named plaintiffs said that Chase held their mortgage while they made payments on their single-family home from 2004 to 2011 and that the terms of their mortgage required funds associated with their account to be held in escrow to cover insurance and property taxes, but that they didn’t earn the interest Chase was required by New York state law to pay.
Chase will pay interest on escrow funds to members of the proposed class for three years on top of the $11.5 million settlement, which means the bank is expected to ultimately pay nearly $18.75 million in connection with the case. The borrowers indicated that with the three years’ of continued payments, they would be paid back about 65% of their estimated damages.
The plaintiffs in the suit are represented by Lieff Cabraser partner Rachel Geman along with co-counsel at Giskan Solotaroff & Anderson LLP and Tusa PC.