Funds from lending settlement being spent
BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced the distribution on Friday of $1.75 million worth of payments from Sand Canyon, an H&R Block Inc. subsidiary, as part of a settlement to resolve discriminatory lending allegations.
Payment from Sand Canyon, formerly Option One, includes $1.75 million to more than 2,100 minority borrowers throughout the state, ranging from $100 to $5,000. The average payment from the company is approximately $816.
"We are pleased to deliver this restitution," Coakley said. "Option One made loans that it knew were likely to fail and it discriminated against African-American and Latino borrowers. Option One's disregard for prudent underwriting standards contributed to the economic downturn we still find ourselves in today."
The payments are a part of a settlement Coakley's office reached with Option One in August 2011. Under the terms of the settlement, Option One was required to pay $9.8 million to resolve allegations of unfair and discriminatory practices in mortgage lending.
Borrowers impacted by the allegedly predatory lending practices of Option One will receive claims forms in the next few weeks. Option One borrowers who received their loans between 2004 and 2007 will also receive hundreds of additional checks totaling $6 million.
The settlement also provides relief for borrowers who still have an Option One loan. Borrowers can receive loan modifications with significant write-downs of principal balances and reduced interest rates, depending on certain loan risk factors. More than 247 borrowers have received modifications through the settlement, resulting in an estimated monthly payment reduction of $8.3 million and a principal reduction of $39.6 million.
In the past four years, Coakley's office has obtained recoveries from Fremont Investment & Loan, Bank of America, Goldman Sachs, Royal Bank of Scotland, Morgan Stanley and Option One for their roles in the subprime lending crisis.
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