A recent Law 360 story by Lauren Berg, “Borrowers Seek $49M Atty Fees in BofA, Countrywide Case” reports that, following a recent $250 million settlement that ended a consolidated class action accusing Bank of America, Countrywide Financial Corp. and others of participating in a fraudulent real estate appraisal scheme, the borrowers asked for $49 million in attorney fees.
In a 35-page motion, the borrowers said they faced "enormous financial and legal risk" in pursuing their nearly seven-year-old case that ended in a settlement in February, and asked the court to grant them more than $49 million, or about 19% of the settlement amount, in attorney fees and $2.3 million in expenses. The borrowers noted the amount is below the Ninth Circuit's 25% benchmark.
The $250 million settlement ended allegations that Countrywide, which Bank of America bought in 2008, and an affiliated appraisal vendor schemed in the years leading up to the financial crisis to generate bogus, inflated appraisals in order to close as many home loans as possible. Under the terms of the agreement, the estimated 2.4 million class members will not have to file claims forms to receive a cut of the $250 million common fund. The proposed settlement class is defined as U.S. residents who applied for a mortgage loan at the now-defunct Countrywide and whose properties were appraised by affiliated vendor LandSafe Inc. from 2003 through 2008.
The amount paid to each borrower will represent at least 22% of the appraisal fee taken by the defendants when assessing the mortgage applications, according to the filing. The borrowers pointed to the seven years of litigation they had to go through to get to this point, including the financial companies' motions to dismiss and extensive discovery disputes. When the borrowers sought class certification, the defendants also "vigorously opposed" the move, according to the motion.
The borrowers said they should receive the $49 million in attorney fees because the settlement result is "exceptional." They also noted that class counsel represented the borrowers on a "purely contingent basis," investing time and money in the prosecution of the action without any guarantee they would be repaid. "Class counsel took a significant financial risk in prosecuting this case, expending a substantial amount of time, money and resources on a contingent basis over the course of more than seven years, without any assurance of victory and with the singular focus of maximizing the recovery of class members," the borrowers said. The borrowers said class counsel devoted 29,654 hours to the case and incurred more than $2.3 million in out-of-pocket expenses.