WaMu seeks court approval of $13 million class-action settlement

By Jennifer Lanning Drey

Savannah, Ga., April 1 - Washington Mutual, Inc. requested court approval of a $13 million settlement that would resolve litigation currently pending in the District Court for Eastern New York, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

The litigation claims that WaMu's former subsidiaries charged improper fees on home loans, mortgage loans, coop loans, home equity loans and home equity lines of credit.

WaMu believes the litigation is without merit and unsupported by evidence, according to the filing.

However, WaMu also said it recognizes the risks, expense and length of continued proceedings necessary to defend the litigation through trial and any appeals. As a result, the company said it has negotiated a settlement.

Under the settlement, consumers or borrowers who paid the allegedly prohibited fees will be put in a class. WaMu will deposit $13 million into a segregated account that will be used to pay court-approved incentive awards.

Washington Mutual, a Seattle-based savings and loan holding company, filed for Chapter 11 bankruptcy on Sept. 26, 2008. Its Chapter 11 case number is 08-12229.

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