BOSTON, June 10 (UPI) -- One of the largest mortgage lenders in Massachusetts has settled a predatory lending lawsuit for $10 million, the state's attorney general said Wednesday.
Although the Fremont Investment & Loan Co. previously denied the allegations in court, "they essentially agree that their actions were unfair and deceptive, and they have agreed to pay damages for that," said Attorney General Martha Coakley.
The lawsuit said a high number of Fremont's subprime mortgages went into default due to practices that included "no documentation" borrowing, that increased risks.
"Their very terms -- short-term interest rates followed by payment shock, plus high loan-to-value and high debt-to-income ratios -- were likely to lead to default and foreclosure," a statement released by the attorney general office said.
Fremont originated 15,000 loans in the state between 2004 and 2007, the Boston Globe reported. It's parent company, Fremont General Corp., filed for bankruptcy protection in 2008.
Coakley said 80 percent of the settlement will be used "to mitigate the damage," to homeowners, while the remaining 20 percent would go to state penalties and legal costs.
Company officials referred requests for comment to their Web site, which said the company changed its name to Fremont Reorganizing Corp., the newspaper said.