Nearly 20,000 borrowers will receive a second compensation check this week from a fund that resulted from the FTC’s settlement with home mortgage lender First Alliance Mortgage Co. and its CEO. Borrowers who obtained home mortgage loans through First Alliance previously received compensation for the loan origination fees the company charged them in a round of checks mailed in December 2002. The additional money comes as the parties continue to implement a settlement agreement.
According to the settlement, the initial pool of almost $45 million was slated to more money as First Alliance was liquidated in bankruptcy. The additional funds bring total consumer redress to $65 million.
First Alliance, headquartered in Irvine, Calif., formerly offered home loans, usually secured by first mortgages, in 18 states and Washington, D.C. The company marketed its loans to the subprime market, which includes borrowers with poor credit ratings who couldn’t qualify for conventional financing. Brian Chisick was the founder, CEO, chairman and president of the company.
The FTC sued First Alliance in October 2000, charging that the company violated federal and state laws in making home mortgage loans to consumers through deceptive means, and later added Chisick and his wife as defendants.
In March 2002, First Alliance and the Chisicks agreed to settle the charges. The settlement was approved by the federal district court on Sept. 9, 2002. The checks mailed this week probably will be the final distribution from the settlement. Nearly 8,000 borrowers who previously released their rights against First Alliance in a separate California action already have received $500 each and will not receive additional compensation.
The redress fund administrator maintains a Web site with details about the settlement at www.famcosettlement.com.
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