For Immediate Release - August 24, 2012

AG Coakley announces $1.75 Million in Payments Distributed to Minority Borrowers Affected by Discriminatory Lending Practices

More Than 2,100 Checks Distributed as a Result of AG’s Settlement with Option One

BOSTON – As part of a settlement with Sand Canyon (formerly Option One), a subsidiary of H&R Block, Inc., the Commonwealth has distributed payments totaling $1.75 million to minority borrowers affected by the company’s discriminatory lending practices, Attorney General Martha Coakley announced today.

More than 2,100 affected borrowers throughout the Commonwealth will receive checks, ranging in payment from $100 to $5,000, with the average payment being approximately $816.

 

“We are pleased to deliver this restitution. Option One made loans that it knew were likely to fail and it discriminated against African-American and Latino borrowers,” AG Martha Coakley said. “Option One’s disregard for prudent underwriting standards contributed to the economic downturn we still find ourselves in today.”

 

The payments to minority borrowers are a part of the settlement AG Coakley’s Office entered into last August, in which Option One was required to pay $9.8 million to resolve claims of discriminatory and unfair mortgage lending practices. In the lawsuit, the AG alleged that H&R Block’s discretionary pricing policies gave mortgage brokers free reign to charge excessive and unjustified fees, causing Black and Latino borrowers to pay more money, on average, for their loans than other similarly situated borrowers. In 2008, when the lawsuit was filed, it was the first by a state’s AG’s Office alleging civil rights claims against a subprime lender. 

 

Borrowers victimized by Option One’s predatory lending practices will receive claims forms in the coming weeks, and the AG anticipates distributing hundreds of more checks totaling $6 million to other Option One borrowers, who received their loans between 2004 and 2007.

 

The settlement also provides relief for distressed borrowers who still have an Option One loan. These borrowers are eligible for loan modifications that include significant write-downs of principal balances and reduction of interest rates, depending on the prevalence of certain risk features in the loan.  To date, more than 247 borrowers have received modifications through the settlement, resulting in an estimated $39.6 million in principal reduction and $8.3 million in monthly payments reduced.

 

            Borrowers with questions about the loan modification program are encouraged to call (617) 963-2660 to speak with an AG’s Office employee personnel dedicated to implementation of the settlement.  Individuals with questions about the payment distribution can call the Commonwealth’s claims administrator, AB Data, Inc., at (866) 828-2555.

 

AG Coakley is a national leader in bringing actions on behalf of homeowners against companies relating to their role in the subprime market place. Over the past four years, AG Coakley has obtained recoveries from Option One, Morgan Stanley, Royal Bank of Scotland, Goldman Sachs, Bank of America, and Fremont Investment & Loan, for their roles in the subprime lending crisis.

 

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