Lawyers who won a $27.5 million settlement from four title insurance companies are having some headaches distributing the proceeds to more than 66,000 Michigan homeowners who were plaintiffs in the case.

The checks, averaging $345, went in the mail last week. But 594 of the checks bounced, leaving their recipients to pay bad check fees.

Jeff Yellen, a Farmington Hills lawyer representing the homeowners, told the Detroit Free Press he hired a Minneapolis-based consulting firm to handle the payout of the settlement. He blamed the bounced checks on an error by the Minneapolis bank that processed them.

Yellen said the bank will reissue the checks, tacking $20 onto each one to cover bad-check charges. The rest of the 66,000-plus checks were good, he said.

Yellen and two other attorneys filed a class-action lawsuit six years ago on behalf of four Detroit-area residents who said they were overcharged by title insurance companies. Chicago Title Insurance Co. of Missouri, Transnation Title Insurance Co. of Arizona, First American Title Insurance Co. of California and Lawyer’s Title Insurance Corp. of Virginia agreed to settle the lawsuit in February without admitting liability.

The settlement applied to new home purchases between December 1998 and July 2005, and the names of the additional 66,000 plaintiffs were obtained through subpoenas to 500 title insurance agents. The judge in the case set aside $8.7 million of the settlement for attorney’s fees and the costs of bringing the lawsuit.

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