Mortgage Lender Settlement
The state of Massachusetts has reached a $125 million settlement with a subprime mortgage lender, with the result being that over 5000 homeowners in the state will now be eligible for loan modification. The settlement with Option One mortgage resolves charges against the firm of discrimination in lending practices.
It requires that the company, which is currently known as Sand Canyon, must direct its service to forgive over $100 million in principal and reduce monthly payments for borrowers. It has also been ordered to pay almost $10 million to the state for the purpose of homeowner restitution. The charges against the firm allege that Option One made loans that it was aware would most likely fail, and that it discriminated against minority borrowers routinely. The high risk underwriting strategies of this firm and others helped contribute to the housing collapse in the US.