Wells Fargo Bank has agreed to pay $5.5 million to end a Madison County class action it inherited from Wachovia Corporation.
Wells Fargo and plaintiff lawyer Stephen Tillery reported the agreement to Circuit Judge Andy Matoesian on Nov. 16, and he granted preliminary approval.
The agreement provides $4 million for about 46,000 homeowners who paid late fees to Wachovia subsidiary HomEq Servicing from 1999 to 2006.
If they all submit claims, payments will average $87.
The agreement provides $1.5 million for the Korein Tillery firm.
Wells Fargo will publish a refund notice stating that HomEq could charge a late fee in a month where borrowers did not make a full payment within a grace period.
"Occasionally, borrowers made a partial payment or no payment in one month, but made a full payment in a subsequent month," the notice states.
"This lawsuit is about whether HomEq properly charged borrowers a late fee on the full payment in the subsequent month.
"Each of the parties thinks it is correct.
"But to avoid the expense and uncertainty of further litigation, the parties have agreed to settle their dispute."
Class members must file claim forms to receive refunds.
If valid claims exceed $4 million, Wells Fargo will reduce refunds proportionately.
Tillery filed the suit in 2005, ahead of the effective date of a Congressional act that steered most new class actions to federal courts.
He represented David Meyer, Julie Meyer and Judy Kinworthy.
The agreement provides $10,000 for the Meyers and $10,000 for Kinworthy.
Matoesian set a fairness hearing on Feb. 17.
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