Massachusetts judge stops foreclosures on H&R Block unit's loans
By Jerry Kronenberg, Boston Herald
A Massachusetts judge is blocking H&R Block from automatically foreclosing on up to 9,700 Bay State homeowners, ruling that the firm apparently wrote mortgages with "reckless disregard (for) the risk of foreclosure."
"Any lender with even a modicum of business morality should recognize that it is immoral, unethical and unscrupulous to issue a home loan with reckless disregard (for) the risk of foreclosure," Suffolk Superior Court Judge Ralph Gants wrote in a preliminary injunction against H&R Block.
Massachusetts Attorney General Martha Coakley has sued Block over Bay State subprime mortgages issued by the firm's Option One subsidiary.
Coakley claims the high-risk loans violated state consumer-protection laws. She also alleges that Option One charged black and Latino borrowers inflated fees.
Block did not return calls seeking comment, but has denied the charges in court papers.
Nonetheless, Gants' injunction orders Block not to foreclose on any Massachusetts subprime borrower without first giving Coakley's office 30 to 45 days to review the person's loan.
In cases where officials find questionable mortgage terms, Block must first try to negotiate a loan "workout," then seek court approval to foreclose if talks fail.
Gants' order expands on a landmark ruling he issued earlier this year in a lawsuit against subprime-mortgage giant Fremont General.
In that case, the judge declared whole classes of subprime loans "structurally unfair" - a violation of state consumer-protection laws.
Fremont appealed Gants' decision to the state Supreme Judicial Court, which heard oral arguments last month but has yet to rule in the case.
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AG shuts down two mortgage originators
By Boston Business Journal
Massachusetts Attorney General Martha Coakley's office announced Wednesday that it has secured a preliminary injunction against two mortgage originators accused of deceptive mortgage practices.
The injunctions prevent Option One Mortgage Corp. and H&R Block Mortgage Corp. from initiating or advancing foreclosures on loans that may have been secured using unfair business practices. The Attorney General's office filed suit against the two companies alleging they originated thousands of subprime mortgages in the state when the companies knew the customers would not be able to afford the loans. It also alleges that the companies discriminated against minority borrowers in Massachusetts by charging them higher points and fees to close their loans than white customers.
Under the order, American Home Mortgage Servicing Inc., which is servicing loans for Option one, must give the Attorney General's Office at least 30 days notice before it intends to foreclose on any such loan, and if the Attorney General objects, obtain approval from the Court before foreclosing on a loan.
"We are pleased by the court's decision and the relief it will afford, both to homeowners and to the communities suffering from the effects of Option One's loans," said Attorney General Coakley in a statement. "The economic crisis continues to worsen, and predatory subprime lending is at the core of the problem. This decision is further support that some subprime lenders engaged in irresponsible and unlawful lending practices. We intend to hold accountable those who engaged in such unlawful lending conduct."
