The Federal District Court for the Northern District of Alabama issued an opinion on Wednesday evening upholding the certification of a consumer class action against RealtySouth.
Birmingham, AL (
The class includes more than 25,000 people who were charged $149 by RealtySouth at their real estate closing for the so-called “ABC Fee.” Class attorneys Scott Powell, Don McKenna, Jamie Moncus and Bruce McKee of Birmingham firm Hare, Wynn, Newell & Newton LLP say that RealtySouth implemented the ABC fee in 2003 and included it as a separate line item fee on the HUD-1 settlement statement. The suit alleges that RealtySouth performed no specific service for the fee in violation of the Real Estate Settlement Procedures Act known as “RESPA.” RESPA was enacted to protect consumers from unnecessarily high settlement charges caused by abusive settlement practices. The Act specifically prohibits charging a fee for which no service is provided.
Former RealtySouth CEO Tommy Brigham has already given sworn deposition testimony that no specific service is provided in exchange for the ABC fee. Current RealtySouth CEO, Ty Dodge has given an affidavit in a related case stating that the ABC Fee was not intended to cover any specific service. Former RealtySouth agents have also testified that no service was performed for the ABC Fee and that the ABC Fee was a “junk fee.” Now that the Court has ruled the case may proceed as a class action, notice will sent to the class members and the case will be prepared for trial. The class action lawyers at Hare, Wynn say that “this case is a textbook example of the proper use of the class action mechanism to protect consumers. The dollars at stake for any individual consumer are less than the filing fee for an individual lawsuit, effectively preventing individual suits.” Under RESPA, RealtySouth may be liable for up to three times the actual ABC Fees charged to over 25,000 consumers.
When written notice of the certified class action lawsuit is approved by the Court, it will be mailed to individuals who paid the fee and will also be posted on class counsels’ website at
About HARE, WYNN, NEWELL & NEWTON, LLP HARE, WYNN, NEWELL & NEWTON, LLP, is the oldest existing plaintiff's law firm in the State of Alabama. In 1991, the firm entered its second century of practice. The firm's philosophy is based upon a dedication to protecting and preserving the dignity and rights of all individuals. Representing the rights of all citizens with the same degree of service previously available only to the corporate community, the firm stands today as an enduring testament to the original vision and ideals of its founder in providing quality representation for individuals and businesses requiring legal services. The firm specializes in representing plaintiffs in commercial and business litigation, as well as handling more traditional cases involving catastrophic personal injury and wrongful death. For more information the firm’s website is
SCOTT A. POWELL
JAMES R. MONCUS
HARE, WYNN, NEWELL & NEWTON, LLP
scott (at) hwnn.com
European shares fell heavily on Monday as fallout from the credit crisis hit the region's banking sector, forcing partial nationalization of two banks and leaving investors to ponder the impact of a U.S. bailout plan.
The euro and sterling fell in the wake of share prices sliding, while safe-haven government bond prices rose.
Money markets remained frozen with banks refusing to lend to one another for all but the shortest periods, prompting the European Central Bank to offer additional funds.
The hard-fought U.S. proposal to establish a $700 billion fund to buy illiquid securities will be sent for a Congressional vote later on Monday after days of tense negotiations and compromises.
But European worries threatened to overshadow the proposal after the Belgian, Dutch and Luxembourg governments were forced to rescue financial firm Fortis over the weekend to prevent a domino-like spread of failure.
In addition, the UK government said that lender Bradford & Bingley's branch network will be sold to Spanish bank Santander and the remainder of the group would be nationalized.
"The nationalizations have an incredibly negative read across for the sector," said Mark Sartori, head of European sales trading at Fox-Pitt, Kelton.
"The contagion is spreading to mainland Europe and everyone's asking: who's next?" he added.
By 4:30 a.m. EDT, MSCI main world equity index fell 1.9 percent, a 1-1/2 week low. The FTSEurofirst 300 Index was down 2.7 percent at 1073.97, while a measure of banking stocks tanked 5 percent to 267.76.
European shares followed a lead set in Asia overnight with Japan's Nikkei share average posting a 1.3 percent decline, erasing earlier gains.
The December U.S. S&P 500 future was down 2 percent, reversing initial gains on news the plan was set for a vote in the House of Representatives.
EURO FEELS THE HEAT
Currency markets also felt the pinch of banking sector contagion, with the euro falling more 2 percent to a 10-day low of $1.4310. A fall of 2.1 percent or more would be the biggest 1-day fall since Jan 2001, while a fall of 2.3 percent or more would be the biggest since its launch in 1999.
In addition, sterling dropped almost 2 percent to $1.8085.
"The crisis has taken on a more international complexion with B&B and Fortis ... There is a worry whether there is the ability or the willingness within Europe for a U.S.-style response," Calyon senior currency strategist Daragh Maher said.
The dollar was well-bid elsewhere on hopes of smooth legislative passing of the $700 billion proposal, rising 1.3 percent versus the Swiss franc. The high-yielding Australian and New Zealand dollars fell 1.7 and 1.3 percent respectively.
December Bund futures were 88 ticks higher at 114.68. Two-year bond yields fell to their lowest since mid-April, while 10-year yields were just under 16 basis points lower at 4.155 percent.
Two-year swap spreads, indicating the strains in the market, rose as high as 120 basis points from 113 bps late on Friday.
In early London trade on Monday the interbank cost of borrowing dollars for three months was indicated as high as 5.27 percent, the highest this year, according to Reuters data.
The closely-watched TED spread, or the difference between these market-based dollar rates and three-month U.S. government borrowing rates, fluctuated in a wide range of around 280 to 440 basis points.
SAFETY VS RISK
Washington's bailout package, though unpopular with the public and viewed skeptically by some analysts, is the biggest effort yet by the U.S. government to ease the worst global financial crisis since the Great Depression.
Yet it alone has not been enough to reverse a powerful move by global investors to purge their portfolios of risk.
"The package will improve liquidity in the system. But I don't think lenders are going to go out carte blanche and provide new capital to the market in an aggressive way," said Leigh Gardner, head of equities distribution for ABN AMRO in Australia.
(Additional reporting by Kevin Plumberg in Hong Kong, Jessica Mortimer and Joanne Frearson in London)
(Editing by Stephen Nisbet)
U.S. lawmakers prepared to vote on Monday on a $700 billion fund to buy toxic debt as the global financial crisis produced Europe's biggest bank rescue to date.
Investors around the world hung on every twist and turn in Washington as Benelux governments moved to part-nationalise
Belgian-Dutch group Fortis.
In Britain, mortgage lender Bradford & Bingley became the second British bank to be taken under the government's wing since the crisis began last year. Shares in French bank Dexia tumbled more than 20 percent on a
newspaper report that it might launch an emergency capital increase.
Fortis is the first major euro zone bank to buckle under the financial turmoil triggered in August last year by U.S. mortgage defaults, and an early relief rally in markets at news of progress in Washington soon fizzled out.
Stock markets in Japan, South Korea and Hong Kong all retreated 1-2 percent, giving up initial gains led by financial shares. U.S. stock futures pointed to a drop at the opening bell and Europe's FTSEurofirst fell 2.5 percent.
The dollar climbed, mainly due to the euro and pound sliding about 1 percent, as the toll on financial firms spread across the Atlantic and stirred expectations that central banks may have to respond by cutting interest rates.
"It's definitely moving toward Europe," said Joseph Kraft, head of Japan capital markets at Dresdner Kleinwort. "It's the beginning of the end and a necessary step, so we should see more institutions nationalized, absorbed or going into default."
The latest upheaval will only worsen the severe strains in money markets as financial firms have all but stopped lending to each other, partly as they prepare to close their books on the third quarter on Tuesday, analysts said.
In the United States, House Republicans were the main obstacle to passage of the bailout bill as they balked at spending so much public money just before elections in November.
But senior Republican Sen. Judd Gregg of New Hampshire threw his weight behind the deal, saying he expected the House to vote on the bill on Monday.
Senate Majority Leader Harry Reid said the Senate could take up the bill by Wednesday.
U.S. Treasury Secretary Henry Paulson said he was confident the program will be enough to unclog jammed financial markets.
Congressional leaders from both parties said they had a tentative agreement on Sunday.
But questions abound as to whether the U.S. financial rescue plan, which would use taxpayer funds to buy up bad mortgage debt, would restore confidence to shaky markets and head off a deeper economic downturn.
"What we are seeing today is illiquidity morphing into insolvency and that is not going to be solved by this (U.S.) package. What is required is an injection of capital or debt forgiveness," said Avinash Persaud, chairman of Intelligence Capital.
EUROPEAN BANK RESCUES
The Fortis rescue came after European Central Bank President Jean-Claude Trichet held emergency talks with government officials over the fate of one of Europe's top 20 banks.
The governments of Belgium, the Netherlands and Luxembourg agreed to inject 11.2 billion euros ($16.4 billion) into the banking and insurance company, which has 85,000 staff worldwide.
Fortis will sell the parts of Dutch bank ABN AMRO it bought last year to Dutch rival ING in a deal expected to be finalized within two weeks, sources familiar with the discussions told Reuters.
In London, the government announced the nationalization of troubled mortgage lender Bradford & Bingley while Spanish bank Santander will buy its retail deposits and branch network.
In Germany, Hypo Real Estate struck a last-minute deal with a consortium of banks to resolve a financing squeeze and a source with close knowledge of the matter said the German government would provide the bulk of a credit guarantee for 35 billion euros.
The U.S. banking system also faced more upheaval. Wachovia Corp is in talks with rivals to be taken over, sources familiar with the situation said on Sunday.
QUALIFIED BIPARTISAN SUPPORT
U.S. congressional leaders from both parties emerged early on Sunday with a tentative agreement that altered key parts of a Wall Street bailout program initially proposed by the Bush administration.
Both U.S. presidential candidates, Republican John McCain and Democrat Barack Obama, offered qualified support for the bailout proposal, an issue that threatens to overshadow their campaigns with less than six weeks until the election.
With many Americans struggling to save their homes from foreclosure, lawmakers were bracing for a grassroots backlash against a bailout for Wall Street banks, which contributed to the U.S. housing bubble with reckless lending.
In the final hours of talks, Democrats and Republicans rushed to add safeguards for taxpayers and provisions that would allow the government to recover funds if house prices recover and its holdings of bad debt gain value.
The proposed legislation would disburse the $700 billion in stages. The first $250 billion would be issued when the legislation is enacted, while another $100 billion could be spent if the president decided it was needed. The remaining $350 billion would be subject to congressional review.
Institutions selling assets under the plan would issue stock warrants to the government, a step intended to give taxpayers a chance to profit if markets recover.
The plan would also let the government buy troubled assets from pension plans, local governments and small banks.
In response to a clamor for limits on executive pay, no executives at participating firms would get multimillion-dollar severance packages -- known as golden parachutes.
A board of top officials, including the Federal Reserve chairman, would supervise the program. Its management would also be under the scrutiny of Congress's investigative arm and an independent inspector general.
The government could also use its power as the owner of mortgages and mortgage-backed securities to help more struggling homeowners modify the terms of their home loans.
"Passage of the plan is just step one. Step two is execution, and there remains considerable uncertainty about how assets will be purchased," said Michael Pond, a bond strategist with Barclays Capital in New York.
(Additional reporting by Deborah Charles, Dan Trotta and David Lawder, Kristina Cooke, John Parry and Eric Burroughs in Tokyo; Writing by Eric Burroughs and Andrew Callus, Editing by Dayan Candappa)