The parties have reached a tentative settlement in an action filed against mortgage sub-servicer Cenlar, FSB, on behalf of Pennsylvania homeowners who allege that the company collected attorney's fees that were not provided for in their mortgage contracts when the homeowners entered bankruptcy or defaulted on their loans. The action alleges that the collection attempts were in breach of the mortgage contracts and violated state commercial laws, and seeks unspecified compensatory and punitive damages. Class counsel will mail claims forms on request after October 24, 2003.

The class is composed of all persons (1) whose mortgages specifically provided for a five percent attorneys' fee upon commencement of foreclosure or issuance of a writ, but contained no other provision specifically providing for recovery of attorneys' fees by the company; (2) were serviced or sub-serviced by Cenlar; (3) were secured by residences in Pennsylvania; and (4) from whom Cenlar collected or attempted to collect attorneys' fees greater than five percent of the mortgage's principal or any attorneys' fees for bankruptcy services or costs, between July 20, 1996, and June 24, 2003.

The settlement will provide the following: (1) for those claimants who are in active bankruptcy or foreclosure proceedings, Cenlar will amend its proof of claim to eliminate all claims for attorneys' fees and costs in those cases where no foreclosure proceedings have commenced; or (2) in those cases where foreclosure proceedings have commenced, amend its proof of claims to include as attorneys' fees and costs no more than five percent of the principal debt plus costs of any foreclosure but not costs related to the bankruptcy proceedings; or (3) in those cases currently in foreclosure proceedings, amend the complaint or, if there is one, the judgment, to include attorneys' fees of no more than five percent of the principal debt.

The following class members who are not currently in bankruptcy or foreclosure proceedings and who did not actually pay any attorneys' fees to Cenlar will receive a cash payment of $75: (1) those who never filed bankruptcy, but Cenlar claimed attorneys' fees of more than five percent in a foreclosure; (2) those from whom Cenlar claimed attorneys' fees or costs in a bankruptcy proceeding but where no foreclosure was commenced; and (3) those against whom foreclosure proceedings were commenced, where Cenlar claimed in either bankruptcy or foreclosure proceedings more than five percent of the principal debt as the total of attorneys' fees in connection with the proceedings.

Those class members who actually paid attorneys' fees or costs to Cenlar fall into two groups: Those who never had a foreclosure but paid Cenlar fees in a bankruptcy will be paid the full amount of fees that they paid or $75, whichever is greater. Those who paid attorneys' fees to Cenlar in a foreclosure will receive the amount that they paid over five percent of the principal debt or five percent, whichever is greater.