Mass. Homeowners May Get Loan Modifications In Settlement

By Sarah Birnbaum

Aug. 9, 2011

BOSTON — Thousands of homeowners in Massachusetts may benefit from a multi-million dollar settlement negotiated between Attorney General Martha Boakley and Option One, a subsidiary of H&R Block.

Coakley says some 5,000 customers who got loans from the mortgage outfit Option One are now eligible for some payback under a $115 million loan modification program. Those homeowners could have their monthly payments, interest rates and principal balances lowered. 
Option One agreed to the deal to settle allegations that it deceived customers when it offered them risky mortgages.
Coakley says Option One was deliberately making unethical loans. “They employed a business model that absolutely failed to gauge the ability of borrowers to repay the loans. In other words, they knew, or should have known that those loans were going to fail,” Coakley said.
About 3,000 black and Latino customers will also be reimbursed for what Coakley says were discriminatory, overly high fees.
“We found that on average, $400-$500 additional was charged to African-American and Latino borrowers. And the statistics, if you look at the fee disparities based on race, and you look at individual cases, as I said we found compelling evidence that they intentionally discriminated in making these loans," Coakley said.
Option One says in a statement that it’s pleased to settle, but it does not admit wrongdoing.

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