Posted Feb 26, 2008 11:16 pm CST
In what is being hailed as a landmark ruling, a Massachusetts judge has prohibited a subprime mortgage lender from foreclosing on an entire class of “structurally unfair” loans there before checking with the state attorney general and taking “reasonable steps” to avoid this outcome.
Issuing a preliminary injunction sought by attorney general Martha Coakley, Suffolk Superior Court Judge Ralph Gants upheld her claim that California-based Fremont General and Fremont Investment and Loan had engaged in unfair and deceptive conduct, according to the Boston Herald and Reuters.
“It is both imprudent and unfair to approve mortgage loans that the borrowers cannot reasonably be expected to repay if housing prices were to fall,” the judge writes in his opinion. “Just because we as a society failed earlier to recognize that (many subprime loans) were generally unfair does not mean that we should ignore their tragic consequences and fail now to recognize that unfairness.”
As discussed in an earlier ABAJournal.com post, Coakley filed suit against Fremont in early October, seeking civil penalties, restitution and an oversight role. Her action is reportedly the first brought against a mortgage lender under the Predatory Home Practices Act of 2004.