FDIC Wins Bid To Toss WaMu Mortgage Kickback Suit

Law360, New York (June 30, 2011, 2:01 PM EDT) -- The government receiver for bankrupt Washington Mutual Bank NA on Tuesday won the dismissal of a putative class action in Pennsylvania accusing the failed bank of collecting kickbacks in return for referring borrowers to certain private mortgage insurance providers.

In granting the Federal Deposit Insurance Corp.'s motion to dismiss, U.S. District Judge Thomas N. O'Neill Jr. concluded that the Financial Institutions Reform, Recovery and Enforcement Act of 1989 “clearly prohibits” the plaintiffs from seeking statutory penalties, including punitive damages, against the FDIC as receiver.

“The primary...
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