Coakley reaches agreement with loan modification firm
BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley has reached an agreement with a Texas-based loan modification firm over allegations of unfair and deceptive lending practices.
The lawsuit targets Loan Servicing LP (Litton), a loan benefits company that serves 1,100 borrowers holding loans originated by Fremont Investment & Loan, according to Coakley.
Coakley's office recently reached a settlement with Fremont after state officials determined the loans were predatory and unfair.
In June 2008, Litton purchased certain mortgage servicing rights from Fremont, thereby becoming subject to certain obligations under a preliminary injunction issued by a Suffolk Superior Court against Fremont in March 2008, according to Coakley.
The agreement reached provides borrowers holding Fremont loans issued by Litton to be eligible for home loan modifications including reduced rates, extended amortization periods and principal forbearances.
The agreement also mandates the company to issue alternatives to foreclosure for delinquent borrowers, as well as a requirement that Litton obtain court approval to foreclose upon a loan that is being contested by the state.
"As we have worked to address the fallout of the subprime lending crisis in Massachusetts over the past several years, one of our main goals has been to help those homeowners who fell to victim unfair and deceptive lending practices to stay in their homes," Coakley said.
The State obtained an injunction against Fremont on Feb. 25, 2008, which prohibits the company from following through on foreclosures that are "presumptively unfair."
Later that year, Coakley's office reached a settlement with Fremont that required the injunction be permanent, as well as ordering the company to pay $10 million to the State.