February 29, 2008 - In an unprecedented ruling by Justice Ralph Gants of the Suffolk Superior Court, the judge ordered Fremont Financial to halt all foreclosure proceedings within the state of Massachusetts. The order was granted to allow state officials to review each of the company's mortgages that are currently in foreclosure proceedings.

Massachusetts Attorney General, Martha Coakley had filed suit against Fremont in October of last year. Fremont is sub-prime lender. Coakley's lawsuit accused the company of engaging in unfair and predatory lending practices within the state by granting mortgages to borrowers that they had no hope of repaying.

In his 29 page ruling, Justice Gants said that a large portion of Fremont's loans in Massachusetts could be "structurally unfair" based on current state lending laws. In order for this determination to be made on a case by case basis Gants set down four criteria that had to be included in each loan. These include a) a low introductory rate that rapidly adjusts upward, b) after the introductory rate period ends the, the new rate must be at least 3% higher, c) monthly payments must be at least equal to half of the borrowers monthly income and, d) the mortgages must not have required a down payment.

Not all of Fremont's loans - around 2,200 of them in Massachusetts - will meet all of the criteria mentioned above, but a sizable proportion are expected to.

The order allows homeowners to renegotiate the terms of their loan with the company and get into a more affordable loan. It will also give some homeowners who can no longer afford their mortgages to find alternative housing and possibly sell their existing homes.

The order gives the attorney general a set time frame to review all of Fremont's mortgages. After determining that a loan does meet the judge's criteria, the AG can sue to halt foreclosure proceedings permanently to protect the homeowners.

by Jim Malmberg

Note: When posting a comment, please sign-in first if you want a response. If you are not registered, click here. Registration is easy and free.

Only registered users can write comments.
Please login or register.