Nearly 1600 hundred Washington homeowners will get back the hidden fees and higher rates they paid to subprime lender Novastar. The federal class action lawsuit was settled earlier this month. The settlement details were announced Thursday. KUOW's Liz Jones reports.
Kansas City based lender Novastar has agreed to pay more than 500 million dollars to settle the lawsuit. That money will help pay back hundreds of people who took out home loans with the company.
Ari Brown is the plaintiffs' attorney. He says Novastar failed to tell borrowers that brokers were paid a commission to give them higher interest loans. He says that lack of disclosure skirted the law.
Brown: "and what the court found was that in cases where it is completely ignored in other words there was no notation whatsoever on the good faith estimate. That is an unfair and deceptive practice as a matter of law."
Brown says everyone represented in the lawsuit will be paid back all the money they lost. That amount ranges from 70 dollars to 20 thousand dollars per person.
Novastar declined to comment. But in a written statement, the company
maintains the fees were properly disclosed and it did nothing wrong.
Meanwhile, Ari Brown says most of the borrowers have left Novastar. But he fears they may face similar problems with another lender.
Brown: "unfortunately, once you get into this sort of subprime treadmill, it's hard to get off. You get into one bad loan with a Novastar, and to get out of it, you have to get into another bad loan with someone else."
But brown says the settlement closes one mortgage loophole, and it could set a precedent for similar cases against sub prime lenders. Liz Jones, KUOW news
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