Fremont General to pay $10 million to end predatory lending suit.
Massachusetts Attorney General Martha Coakley said Tuesday that bankrupt subprime giant Fremont General ( FMT - news - people ) agreed to pay $10 million to settle allegations of predatory lending practices that spurred rising foreclosures in the state. Fremont denied wrongdoing.
Surging delinquencies on subprime mortgages caused havoc on Wall Street, helping to trigger the credit crisis and causing millions to lose their homes. Fremont was one of the largest U.S. subprime lenders. In March 2007, regulators ordered it to stop issuing new loans, and last year it filed for bankruptcy protection.
The settlement trails a deal brokered by Coakley last month in which Goldman Sachs ( GS - news - people ) paid $60 million to settle claims that the investment bank’s role as financier for subprime shops encouraged unfair loans that borrowers would inevitably default on.
The Fremont settlement makes permanent a preliminary injunction issued by the Suffolk Superior Court last year that forbade the California-based company from foreclosing on borrowers whose mortgages had terms that were “presumptively unfair” without prior court approval.
Coakley has taken on firms at different levels of the subprime food chain, including lender Option One and its parent H&R Block ( HRB - news - people ), alleging unfair, deceptive and predatory lending practices. Her office also launched consumer protection statutes last year to regulate mortgage lenders and brokers. Coakley has also brought civil and criminal actions against local lenders and brokers who engaged in fraudulent lending activity, or who engaged foreclosure rescue or loan modification scams.
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