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H&R Block sued over mortgages

June 04, 2008|From Reuters

BOSTON — Massachusetts authorities sued H&R Block Inc. on Tuesday, alleging that its mortgage unit discriminated against black and Latino borrowers and escalated a foreclosure crisis in the state.

The lawsuit is the first by a state in the current crisis to accuse a sub-prime-mortgage lender of civil rights violations.

The complaint, filed in Suffolk Superior Court, accuses H&R's Option One Mortgage Corp. of engaging "in unfair and deceptive conduct on a broad scale."

H&R Block was not immediately available for comment.

Martha Coakley, the state's attorney general, who filed the suit, said H&R Block, the country's biggest tax preparer, and its mortgage unit marketed "extremely risky loan products" and helped escalate the foreclosure crisis in Massachusetts.

The complaint says that Option One charged black and Latino borrowers higher points and fees to close their loans than similarly situated white borrowers and that it targeted black and Latino consumers with marketing "that pushed the sale of predatory loan products."

H&R Block recently said it was refocusing on tax preparation after incurring about $1 billion of losses at Option One, which made home loans to people with poor credit. It no longer offers mortgages.

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