Mass. AG Files Suit Against Option One
Monday, June 16, 2008
by Michael Peron
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Massachusetts Attorney General Martha Coakley announced Tuesday that her office has filed suit against mortgage lender Option One Mortgage Corp., a subsidiary of H&R Block, Inc., and is accusing the company of contributing to the state's foreclosure crisis by issuing deceptive loan products and targeting black and Latino borrowers.
Coakley's office says Option One specifically targeted minority borrowers who had fewer mortgage options to choose from. In a press statement, Coakley's office asserts that Option One charged minority borrowers higher points and fees at closing and failed to inform them about the risky loan products they were about to take on. Coakley's office says, “For example, Option One and H&R Block provided information to their employees about how the limited choices available to these borrowers made them good candidates for subprime loan products. Specifically, the companies encouraged employees and brokers to focus on the “emerging markets” of black and Latino home buyers, who Option One and H&R Block described as having credit concerns, a lack of familiarity with the credit system and difficulty demonstrating conventional credit history.”
Of the 30,000 loans Option One made in Massachusetts between the years 2004 and 2007, 5,700 were issued to black and Latino homeowners.
Attorney General Coakley issued a statement about Option One's practices saying, “A borrower should be able to obtain a loan based upon creditworthiness alone and not because of his or her ethnicity. Our office will continue to enforce civil rights laws in order to keep discrimination out of the mortgage lending process.”
Below is a list of some of the loans that Option One is accused of marketing to minority borrowers:
Stated Income, No-Doc or Low-Doc Loans
Substantial Prepayment Penalties
Incentives for Brokers for Selling Subprime Loans
100-percent Financing
2/28 Loans with “Teaser Rates”
Coakley's office says Option One specifically targeted minority borrowers who had fewer mortgage options to choose from. In a press statement, Coakley's office asserts that Option One charged minority borrowers higher points and fees at closing and failed to inform them about the risky loan products they were about to take on. Coakley's office says, “For example, Option One and H&R Block provided information to their employees about how the limited choices available to these borrowers made them good candidates for subprime loan products. Specifically, the companies encouraged employees and brokers to focus on the “emerging markets” of black and Latino home buyers, who Option One and H&R Block described as having credit concerns, a lack of familiarity with the credit system and difficulty demonstrating conventional credit history.”
Of the 30,000 loans Option One made in Massachusetts between the years 2004 and 2007, 5,700 were issued to black and Latino homeowners.
Attorney General Coakley issued a statement about Option One's practices saying, “A borrower should be able to obtain a loan based upon creditworthiness alone and not because of his or her ethnicity. Our office will continue to enforce civil rights laws in order to keep discrimination out of the mortgage lending process.”
Below is a list of some of the loans that Option One is accused of marketing to minority borrowers:
Stated Income, No-Doc or Low-Doc Loans
Substantial Prepayment Penalties
Incentives for Brokers for Selling Subprime Loans
100-percent Financing
2/28 Loans with “Teaser Rates”
Kerri Panchuk | 06.04.08
