In a lawsuit filed in June 2008, the Commonwealth alleged that Option One engaged in predatory and discriminatory lending in Massachusetts. As a result of the recently announced settlement of this litigation, Option One has paid the Commonwealth $9.8 million. The Commonwealth will distribute much of this money to borrowers who were harmed by Option One's predatory and discriminatory lending. The settlement also provides for loan modification relief valued at $115 million that will help up to 5,500 borrowers stay in their home through reduced monthly payments and extensive principal forgiveness.

Below are the answers to some Frequently Asked Questions about the Commonwealth's settlement. If you do not find the answer to your question below, please contact the Attorney General's Public Inquiry and Assistance Hotline immediately at: 617-727-8400.

Loan Modifications

Payments to Consumers

LOAN MODIFICATIONS

Do I qualify for a loan modification under the terms of the settlement?

In order to be considered for a loan modification under the agreement, you must meet the following criteria:

  1. your loan was originated by Option One between 2004 and 2008;
  2. your loan is currently serviced by American Home Mortgage Servicing, Inc.
  3. the property securing your loan is your primary residence;
  4. you currently occupy the home; and
  5. you are or become at least 45 days late on your mortgage payment(s) before May 6, 2013 because you cannot afford your mortgage payment

How will I find out if I qualify for a loan modification?

Between now and November 6, 2011, AHMSI will be setting up internal procedures to implement loan modifications. During this time, or shortly thereafter, an AHMSI representative will contact you to determine if are eligible for a loan modification.

When the AHMSI representative contacts you, he or she will ask you to provide information so that AHMSI can determine whether you qualify for a loan modification, and, if so, for which type. It is essential that you cooperate with AHMSI and provide the information AHMSI requests. This is the only way you will qualify for a loan modification under the terms of the settlement.

If I qualify for a loan modification, what kind of benefit can I expect?

Generally, if you qualify for a loan modification, your monthly payments will be reduced to between 31% and 36% of your monthly income. If you received what the Commonwealth has concluded was one of the riskiest loans originated by Option One, burdened with a high debt-to-income ratio and a high loan-to-value ratio, you will be eligible for an even greater monthly payment reduction.

You will also have the outstanding principal balance on your loan reduced. The specifics of how much principal will be forgiven through each loan modification will depend on the characteristics of your loan at the time of origination. If you received one of the riskiest loans originated by Option One, you will be eligible to have the outstanding principal balance on your loan reduced to 100% of the current value of your home.

Can my home be foreclosed on while American Home Mortgage Servicing, Inc. determines whether I am eligible for a loan modification?

Between now and November 6, 2011, AHMSI will not proceed with any foreclosures on loans that could potentially be modified under the terms of the settlement, even if a foreclosure was scheduled to occur. If, for some reason, you learn that a foreclosure is still scheduled, you should contact the Attorney General's Public Inquiry and Assistance Hotline immediately at: 617-727-8400.

If I am delinquent, will I be charged late fees while American Home Mortgage Servicing, Inc. is determining whether I am eligible for a loan modification?

If you are eligible for a loan modification under the settlement, or become eligible between now and November 6, 2011, AHMSI will not assess late charges on your account during this time while it determines whether you will receive a loan modification.

I was working with American Home Mortgage Servicing, Inc. on getting a loan modification. What happens now?

AHMSI has halted all pending loan modifications. While this may frustrate you if you were in the process of applying for a loan modification, the settlement may allow you to qualify for a far more generous loan modification. Please be aware that AHMSI may ask you to submit up-to-date information concerning your income and your current financial status, even though you may have recently provided such information.

If, for some reason, AHMSI attempts to place you into a loan modification that was pending prior to August 8, 2011, you should not agree to the modification and you should not sign any paperwork. If AHMSI asks you to complete the pending modification, you should contact the Attorney General's Public Inquiry and Assistance Hotline at the following number: 617-727-8400.

I previously received a loan modification from American Home Mortgage Servicing, Inc. Can I get another one now?

Yes, you can, if you meet the eligibility criteria (see above). The fact that you previously received a loan modification does not restrict your eligibility for a new modification.

I understand that I may be eligible for a loan modification. With whom will I be working to receive the modification?

To receive a loan modification, you must work directly with AHMSI. The Commonwealth will be monitoring loan modifications through communications with AHMSI. Only on rare occasions will the Commonwealth intervene in a borrower's interaction with AHMSI. If you have any questions or concerns about the loan modification process, you can contact the Attorney General's Public Inquiry and Assistance Hotline at: 617-727-8400.

How can I contact American Home Mortgage Servicing, Inc. to discuss whether or not I will receive a loan modification?

If you are eligible for a loan modification, AHMSI will be contacting you in the coming months. Should you wish to contact AHMSI about a loan modification, you can reach AHMSI as follows:

I am having problems with American Home Mortgage Servicing, Inc. Whom can I call?

If you are dissatisfied with AHMSI during the loan modification process, or if you do not understand the process after discussing it with AHMSI, you should contact the Attorney General's Public Inquiry and Assistance Hotline at: 617-727-8400.

I have an Option One loan, but it is not currently serviced by American Home Mortgage Servicing, Inc. Am I eligible for a loan modification?

No. You are not eligible under the terms of the settlement. You should contact the Attorney General's Public Inquiry and Assistance Hotline at: 617-727-8400 to discuss your situation. You may be eligible for a payment.

I had an Option One loan, but was able to refinance out of it and get a mortgage with another lender. Am I still eligible for a loan modification?

No. You may be eligible for a payment. See Part II for more information about payments.

I had an Option One loan, but sold my home and paid off the loan. What type of relief am I entitled to?

You may be eligible for a payment. See Part II for more information about payments.

PAYMENTS TO CONSUMERS

I heard that some portion of the money the Commonwealth received as a result of the settlement will be distributed to borrowers who received predatory loans. Will I receive a cash payment?

Some portion of the $8 million in borrower restitution the Commonwealth received as a result of its settlement with Option One will be directed toward borrowers who:

  1. have had their Option One loan foreclosed on;
  2. have refinanced out of their Option One loan; or
  3. have sold their homes and paid off their Option One loan;

The Commonwealth has not yet determined the range of the payments that will be made to borrowers or when those payments will be distributed. Should the Commonwealth determine that you are eligible for a payment, the Commonwealth, or a third party administrator hired by the Commonwealth, will contact you.

If your address has changed since you received an Option One loan, and you believe you may be eligible to receive a payment, please call the Attorney General's Public Inquiry and Assistance Hotline, at 617-727-8400, and provide the Attorney General with your current contact information, including your home address, telephone number, and e-mail address.

I heard that I some portion of the money the Commonwealth received as a result of the settlement will be distributed to Black and Latino borrowers who paid more for their Option One loans. Will I received a cash payment?

Some portion of the $8 million in borrower restitution the Commonwealth received as a result of its settlement with Option One will be directed toward Black and Latino borrowers who suffered discrimination.

The Commonwealth has not yet determined which borrowers qualify for a payment, the range of the payments that will be made to borrowers, or when those payments will be distributed. Should the Commonwealth determine that you are eligible for a payment, the Commonwealth, or a third party administrator hired by the Commonwealth, will contact you.

If your address has changed since you received an Option One loan, and you believe you may be eligible to receive a payment, please call the Attorney General's Public Inquiry and Assistance Hotline, at 617-727-8400, and provide the Attorney General with your current contact information, including your home address, telephone number, and e-mail address.

I am a minority borrower who received a predatory loan. Do I have to choose which payment I receive? Which will be more money?

Black and Latino borrowers may be entitled to two different payments. If you are a Black or Latino borrower who received an unfair loan and who was also the victim of discrimination, you may receive a different payment for each harm suffered.

The Commonwealth has not yet determined which borrowers qualify for a payment, the range of the payments that will be made to borrowers, or when those payments will be distributed. Should the Commonwealth determine that you are eligible for a payment, the Commonwealth, or a third party administrator hired by the Commonwealth, will contact you.

If your address has changed since you received an Option One loan, and you believe you may be eligible to receive a payment, please call the Attorney General's Public Inquiry and Assistance Hotline, at 617-727-8400, and provide the Attorney General with your current contact information, including your home address, telephone number, and e-mail address.