Mass AG Tags Option One, H&R Block For Alleged Deceptive Practices In Race-Based Discriminatory Predatory Lending Suit

In Boston, Massachusetts, Reuters reports:

• Massachusetts authorities sued H&R Block Inc. on Tuesday, charging that its mortgage unit discriminated against black and Latino borrowers and escalated a crisis over property foreclosures in the state. The lawsuit is the first by a U.S. state to accuse a subprime-mortgage lender of civil rights violations following a wave of foreclosures of homes in poor, often black, neighborhoods nationwide. The complaint, filed in Suffolk Superior Court, accuses H&R's subprime-lending subsidiary, Option One Mortgage Corp, of engaging "in unfair and deceptive conduct on a broad scale."

According to Massachusetts Attorney General Martha Coakley in the lawsuit, Option One and its corporate parent, H & R Block, allegedly marketed loans with layers of risky features, including:

1. 100% Financing,
2. 2/28 Loans with “Teaser Rates”,
3. “Stated Income,” “No-Doc” or “Low-Doc” Loans,
4. Substantial Prepayment Penalties,
5. Lucrative Broker Incentives to Sell Expensive Subprime Loans.

For more, see Mass. sues H&R Block over mortgages to minorities.

From the Massachusetts Attorney General's Office:

• Lawsuit - State of Massachusetts v. H&R Block, Inc., et al.,
• Press Release - Attorney General Martha Coakley Files Lawsuit Against National Mortgage Lender Option One and Parent H&R Block for Deceptive and Discriminatory Lending Practices.

Go here for other posts on alleged discriminatory subprime lending.

Act Of Forgery Need Not Be Committed At The Hand Of Person To Be Charged

Reported in a recent blog entry on a California case is a reminder that, in California, tricking someone into signing a document may constitute forgery on the part of the scammer.

In addition, a decision of the New York Court of Appeals, recently cited in two 2007 state court decisions, serves as a reminder that, in New York as well, the act of forgery need not be done by the hand of the person being charged; fraudulently procuring the signature of another to an instrument which the signer has no intention of signing constitutes forgery on the part of the procurer. It is sufficient that the forgerer caused or procured it to be done.

The New York Court of Appeals decision in Marden v. Dorthy, 160 N. Y. 39 (NY 1899), a case over a century old, is the support for this proposition.

This case has been recently cited by a Brooklyn trial court in:

• Olympus Servicing, L.P. v Lee, 2007 NY Slip Op 50833(U), 15 Misc 3d 1124 (April 23, 2007),

and also by a New York state intermediate appellate court in:

• Ameriquest Mtge. Co. v Gaffney, 839 N.Y.S.2d 203, 41 A.D.3d 750 (App. Div. 2d Dept., 2007).

While over a century old, Marden v. Dorthy appears to still be valid precedent, based on the two recent cases citing it. Thanks to Jonathan Schloss for bringing the two 2007 cases to my attention.

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It is unknown to me why New York authorities haven't raised this issue in the context of foreclosure rescue transactions (either in civil or criminal prosecutions) where financially strapped homeowners are unwittingly signing over the deeds to their homes, deeds that are, in many cases, intentionally buried in a stack of legal documents described to the homeowner as "refinancing papers". Perhaps it is a legal theory that should be given some thought.

For those outside New York and California who are having problems with foreclosure rescue operators scamming trusting homeowners, whether by cleverly sneaking instruments of conveyance into "stacks of papers" or otherwise, and getting the homeowners to unwittingly sign those papers, you might want to check your state's statutes and case law as it relates to forgery, criminal possession of forged instruments, securing writings by deception, and other similar sounding illegal acts to see if the law of your state is similar to that of New York and California in that an instrument containing an authentic signature can still be considered a forgery if the signer was somehow tricked into signing it.