About 5,500 Massachusetts homeowners will see their home loans adjusted and about 3,000 black and Latino borrowers will be reimbursed for high fees as part of a settlement with Option One, a subprime lender the state accused in a lawsuit of unfair and discriminatory lending practices.
"If you look at fees and disparities based on race ... on average between $400 and $500 additional was charged to African-American and Latino borrowers," said Massachusetts Attorney General Martha Coakley on Tuesday as she announced the settlement, valued at $125 million, including an estimated $115 million in home loan adjustments.
Option One is now known as Sand Canyon, a subsidiary of H&R Block.
"Five thousand Massachusetts homeowners will be able to stay in their homes, will not be foreclosed upon," Coakley said. "These will be modifications that make sense, given now the value of the property, the income of the homeowners."
The state's lawsuit alleged Option One made loans it knew or should have known had a high risk of failing.
She said the lawsuit filed in 2008 was the first in the nation alleging civil rights claims against a subprime lender. The settlement was filed late Monday in Suffolk Superior Court.
With reporting from The Associated Press and the WBUR Newsroom
This program aired on August 9, 2011. The audio for this program is not available.