LOUISVILLE, Ky. | A federal judge has given preliminary approval to a settlement between Countrywide Financial Corp. and millions of customers whose detailed financial information was exposed in a security breach.
Under terms of the settlement, Countrywide, now owned by Bank of America, would offer free credit monitoring to up to 17 million people whose information was exposed during the security breach. That group includes anyone who obtained a mortgage and anyone who used Countrywide to service a mortgage before July 1, 2008.
The settlement entitles a person up to $50,000 in reimbursement from Countrywide per instance of identity theft, provided the victim actually lost something of value, was not reimbursed, and it is more likely than not the theft stemmed from Countrywide.
U.S. District Judge Thomas B. Russell, who oversaw more than 35 lawsuits related to the security breach, granted class-action status to the suit and gave preliminary approval of the settlement Wednesday. A fairness hearing is scheduled for July in Louisville.
“The proposed settlement agreement provides for a reasonable solution that properly addresses the complications of identity theft,” Judge Russell wrote.
Shirley Norton, a spokeswoman for Bank of America, said the settlement is “in the bank’s best interest” to avoid additional legal expenses.
Plaintiffs’ attorneys Ben Barnow and Daniel Haviland did not immediately return messages seeking comment.
The lawsuits stem from the arrest of Rene Rebollo Jr., of Pasadena, Calif., a former senior analyst for Countrywide, and Wahid Siddiqi, of Thousand Oaks, Calif. Federal investigators said Mr. Rebollo used a flash drive to download data from about 20,000 customers a week for two years from 2006 through August 2008.
Mr. Rebollo has pleaded not guilty and is scheduled for trial in January.
Countrywide has said it has worked closely with the FBI and federal investigators and that the security breach does not appear to have resulted in anyone’s identity being stolen.