Class action funds help support Predatory Lending Clinic
The Ronald A. Peterson Law Clinic has received a distribution from the settlement of the class action suit Pierce v. NovaStar Mortgage to support the Predatory Lending Clinic.
The clinic received the money through a cy pres award, used to disburse any funds remaining from a class action settlement or verdict after the plaintiffs and all similarly situated individuals have been identified and paid. Charitable organizations that work in areas related to the subject matter of the class action are eligible to receive the funds.
Ari Brown '99, one of the plaintiff lawyers in the suit, nominated the clinic to be a recipient of the cy pres funds.
"The mortgage industry was plagued with abusive practices that hurt hundreds of thousands of people," said Brown. "Organizations such as the Peterson Clinic perform an absolutely critical service for borrowers faced with the loss of their homes who would otherwise find it too costly or too risky to litigate their claims, especially these days when government funding for legal services has been cut to the bone."
Students in the Predatory Lending Clinic represents clients who have been victims of unlawful mortgage lending practices as well as foreclosure rescue scams, unlawful mortgage broker service practices, and unfair debt collection practices. Last year, students traveled to New Orleans to work with individuals displaced by Hurricane Katrina on a number of consumer protection issues.
"Our clients benefit from the pro bono services we provide, and our students benefit from the experience of pursuing justice for those who would otherwise be denied a voice," said Associate Professor Bryan Adamson, who supervises the Predatory Lending Clinic. "This award will help defray the often considerable costs of investigating and litigating claims related to unfair lending practices."
The NovaStar suit claimed that the mortgage company did not appropriately disclose fees that were paid to independent mortgage brokers for arranging loans with higher interest rates, in violation of federal and state laws requiring such disclosure within three days of a loan application. NovaStar agreed to settle the case in 2007 for $5.1 million, although the company denied that it had done anything wrong. In addition to the named plaintiffs, more than 1,700 other borrowers were identified to receive a share of the award.