Magazine article Mortgage Banking

Judge Approves Lawsuit Involving First Alliance. (Business Alert)

Magazine article Mortgage Banking

Judge Approves Lawsuit Involving First Alliance. (Business Alert)

Article excerpt

IN A HEARING IN SEPTEMBER IN U.S. District Court, Central District of California, Judge David Carter approved the settlement of a lawsuit involving Irvine, California--based First Alliance Mortgage Company and its chief executive officer, Brian Chisick. Under the settlement, nearly 18,000 borrowers will receive as much as $60 million in compensation. The court approved the previously disclosed settlement reached between the company and various litigants, including a certified class of borrowers, other private plaintiffs, the FTC and six states. The court also confirmed the Amended Debtor's Joint and Consolidated Plan of Reorganization on Sept. 10.

Under the settlement, a consumer redress fund will be created and will be funded by all remaining assets of First Alliance, which has been liquidated in bankruptcy court. In addition, Chisick and his wife, Sarah Chisick, will pay $20 million into the fund. First Alliance offered home-equity loans targeted to subprime borrowers, a group that includes those with marginal or poor credit ratings, many of whom would not qualify for conventional loans.

Washington, D.C.--based AARP's lawsuit against First Alliance alleged that the company engaged in deceptive business practices to lure consumers into taking out loans with large origination fees or points. …

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