H&R Block Sued over Alleged Lending Discrimination

[Mike]

This was published in today's Kansas City Star Business section:*Now-sold Option One accused of deceiving and unfairly treating minority borrowers.*By Gene Myers, The Kansas City StarMassachusetts' attorney general Tuesday accused *H&R Block Inc.* and its former *Option One Mortgage Corp.* subsidiary of discriminating against black and Latino borrowers as it made allegedly predatory loans to them.Block, based in Kansas City, had not seen a copy of the lawsuit late Tuesday and could not comment, company spokeswoman Nancy Mays said.*Massachusetts Attorney General * Martha Coakley said the suit filed in Suffolk Superior Court alleges that Option One and Block engaged in unfair and deceptive conduct by offering many Massachusetts borrowers risky subprime loans that the lenders knew or should have known would fail..The lawsuit alleges that the lenders also discriminated against minority borrowers by targeting them for risky loan offers and by charging higher points and closing fees than white borrowers were charged for similar transactions.Option One made more than 30,000 loans in Massachusetts between 2004 and 2007, including more than 5,700 to black and Latino borrowers, before it stopped lending in Massachusetts, Coakley said. Block lost more than $502 million in late 2007, shutting down its Option One lending operations. Block lost $808 million during the 2007 fiscal year lending to borrowers with shaky credit histories.Last month, Block sold Option One's remaining loan servicing operations to billionaire Wilbur Ross, whose *American Home Mortgage Servicing Inc. * affiliate in Texas continues servicing old mortgages. American Home Mortgage is also named as a defendant in the Massachusetts lawsuit.The complaint also alleges that Option One and Block failed to credit some borrowers for payments, demanded excessive fees to avoid foreclosure and pressured delinquent borrowers to sign forbearance agreements that unfairly limited borrowers' rights when foreclosure loomed. Massachusetts authorities in October filed and won a case alleging broadly similar lending abuses by the California lender *Fremont General Corp.*and its *Fremont Investment & Loan* affiliate, Coakley's office said. Tuesday's suit against Block is believed to be the first filed by any state that alleges civil rights violations in connection with subprime lending.The complaint seeks injunctions restricting future foreclosures on Option One mortgages and curbing the sale of those mortgages to other lenders as well as civil penalties and restitution for borrowers.The action also asks the court to order modifications in existing loans to remedy the alleged abuses and to end the alleged discrimination.Prices for Block shares closed at $23.60, up 26 cents Tuesday on the *New York Stock Exchange.*This article leads me to wonder if OOMC singled me out for predatory lending due to my being deaf. I have a feeling that the broker who finagled the transaction told OOMC that she had a deaf client (yours truly). I only met her once, and all other contact was conducted via the internet relay for the deaf, so she knew of my disability. I wish I knew how I could prove this, but I'm glad that at least one state is taking action against OOMC, and hope other states follow suit, and SOON! I do have the Kansas Attorney General's office conducting an investigation following my complaint to them, so maybe something will come of that in my favor.Hooray for Massachusetts!