DOWNEY FINANCIAL CORP
8-K, 1999-07-15
SAVINGS INSTITUTION, FEDERALLY CHARTERED
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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

         DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 15, 1999

                             DOWNEY FINANCIAL CORP.
             (Exact name of registrant as specified in its charter)





                 DELAWARE                                 33-0633413
     (State or other jurisdiction of               (I.R.S. employer
      incorporation or organization)                identification number)

                         COMMISSION FILE NUMBER: 1-13578

                               3501 JAMBOREE ROAD
                         NEWPORT BEACH, CALIFORNIA 92660
              (Address of principal executive offices and zip code)

        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949)854-0300



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ITEM 5. OTHER EVENTS.

     On June 2, 1999, a complaint  was filed in the Superior  Court of the State
     of  California in and for the County of Los Angeles  against  sixteen large
     banks located in California,  including Downey Savings and Loan Association
     F.A.  (the  "Bank").   The  complaint  alleges  that  the  defendant  banks
     fraudulently obtained monies from homeowners/mortgage borrowers by charging
     them deed of trust  reconveyance  fees but failing to actually reconvey the
     related  deed of trust  upon  refinancing  or  repayment  of the loan.  The
     complaint  further  alleges that the  defendant  banks failed to refund the
     reconveyance fee to the  homeowner/mortgage  borrower and failed to escheat
     the  money to the State of  California,  as  required  by  California  law.
     Plaintiff  seeks  monetary  damages  against  the  defendants  in excess of
     $100,000,000.

     It is and has been the Bank's practice to effect a reconveyance of the deed
     of trust when a homeowner/mortgage  borrower refinances or repays the loan.
     Therefore,  the  material  factual  allegations  of the  complaint  have no
     foundation in fact with respect to the Bank.  Management  believes that the
     resolution of this matter will not have a material  effect on the Bank's or
     the Company's financial position or results of operations.


ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.


         Not applicable.


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                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                                DOWNEY FINANCIAL CORP.





Date:  July 15, 1999                  By        /s/ Thomas E. Prince
                                             ----------------------------
                                                    Tomas E. Prince
                                             Executive Vice President and
                                               Chief Financial Officer


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