Massachusetts Attorney General Martha Coakley's office has filed a lawsuit in Suffolk Superior Court against Option One Mortgage Corp., a subprime lender that originated thousands of loans in Massachusetts, and its parent company, H&R Block Inc.
The complaint alleges that Option One and H&R Block engaged in unfair and deceptive conduct on a broad scale by selling extremely risky loan products that the companies knew or should have known were destined to fail to Massachusetts consumers. The complaint also alleges that the companies discriminated against black and Latino borrowers in Massachusetts by charging them higher points and fees to close their loans than similarly situated white borrowers and by targeting black and Latino consumers with marketing that pushed the sale of predatory loan products.
Specifically, Option One and H&R Block allegedly marketed loans with layers of risky features, including loans with 100% financing via 80/20 loans; 2/28 loans with teaser rates; stated-income, no-doc or low-doc loans; and mortgages with substantial prepayment penalties. The firms allegedly paid mortgage brokers compensation to place borrowers in loans with interest rates higher than those for which they qualified, and also offered lucrative financial incentives that encouraged loan officers to generate as many loans as possible for as much money as possible, without regard for whether the loans were affordable.
The attorney general's office is seeking civil penalties, restitution and an injunction, which would prohibit Option One and American Home Mortgage, the current servicer of most loans originated by Option One, from selling or transferring any Massachusetts mortgages and from foreclosing on any Massachusetts loan without giving the attorney general's office a 90-day opportunity to review the loan transaction and object to the foreclosure.
Source: Office Of Attorney General Coakley
