$18.2M Bear Stearns Mortgage Class Action Settlement Gets Final OK

A California federal judge has given final approval to an $18.3 million class action settlement, resolving allegations that Bear Stearns Residential Mortgage Corporation used misleading loan documents to convince homeowners to purchase adjustable rate mortgages (ARM).

On Monday, U.S. District Judge S. James Otero issued the final order approving the Bear Stearns class action settlement, which will put an end to a class action lawsuit that was initially filed in 2009 by plaintiffs who alleged JPMorgan and units of Bear Stearns failed to make proper disclosures about interest rates associated with the mortgages.

Specifically, the class action lawsuit alleged that the mortgage documents failed to disclose that the loan’s principal balance would increase if the borrower made the minimum monthly loan payment.

The loans were acquired by Bear Stearns’ lending unit, EMC Mortgage Corp., which JPMorgan took over in 2008. In September 2012, Judge Otero certified a class of people who had option ARM mortgages purchased by EMC secured by property in California between August 2003 and March 2013.

The Bear Stearns option ARM settlement was preliminarily approved in September 2013. Under the terms of the class action settlement, Class Members will receive between $500 and $5,400. Approximately $500,000 of the settlement funds will be split among the nearly 2,000 members of the Truth In Lending Act (TILA) subclass, whose loans were originated by Bear Stearns on or after Aug, 28 2006.

In his decision to grant final approval to the class action settlement, Judge Otero noted that of more than 5,000 Class Members, only seven requested to be excluded from the settlement.

Bear Stearns denies the allegations and maintains that its option ARM loan documents properly disclosed the minimum monthly payment and negative amortization. However, the company has agreed to provide cash payments to Class Members through this class action settlement.

The deadline to submit a claim for the Bear Stearns option ARM settlement has already passed. It is not yet certain when checks for the Bear Stearns option ARM settlement will be distributed. For more information about the Bear Stearns optional ARM class action settlement, visit www.optionARMclass.com or check out the Top Class Actions settlement page.

The plaintiffs are represented by J. Mark Moore of Spiro Moore LLP; Williams Cuker and Michael J. Quirk of Williams Cuker Berezofsky LLC; Jeffrey K. Berns and Lee A. Weiss of Berns Weiss LLP; and David M. Arbogast and Chumahan B. Bowen of Arbogast Bowen LLP.

The Bear Stearns Option ARM Class Action Lawsuit is Monaco, et al. v. The Bear Stearns Cos. Inc., et al., Case No. 2:09-cv-05438, in the U.S. District Court for the Central District of California.