Countrywide settlement over ID theft gets initial OK

LOUISVILLE, Ky. — A federal judge has given preliminary approval to a settlement between Countrywide Financial and millions of customers whose detailed financial information was exposed in a security breach.

Under the terms of the settlement, Countrywide, now owned by Bank of America, would give 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 to receive up to $50,000 in reimbursements from Countrywide per instance of identity theft, provided they actually lost something of value, were not reimbursed and that it was likely the theft stemmed from the Countrywide breach.

U.S. District Judge Thomas B. Russell of Paducah, Ky., 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 hearing is scheduled for July in Louisville.

"The proposed settlement agreement provides for a reasonable solution that properly addresses the complications of identity theft," 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.

"We look forward to moving ahead with the settlement," Norton said.

Plaintiffs' attorneys Ben Barnow and Daniel Haviland did not immediately return messages seeking comment.

Attorneys for the plaintiffs say Countrywide Financial had all his clients' financial information including mortgage information, credit-card and Social Security numbers and birth dates.

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 Rebollo used a flash drive to download data from about 20,000 customers a week for two years from 2006 through August 2008.

Rebollo then sold the information to Siddiqi for $500 and earned a combined $50,000, federal investigators said.

Siddiqi pleaded guilty Dec. 9 to 10 counts of fraud and admitted to selling the information to third parties, including an undercover FBI agent.

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 identities being stolen.