AG reaches mortgage assistance deal with Fremont

The Massachusetts attorney general has negotiated an agreement with the owner of subprime mortgages made by Fremont Investment & Loan to reduce struggling borrowers' payments or pay them relocation assistance.

The unusual agreement was announced this morning and is further fallout from a lawsuit filed by Attorney General Martha Coakley's office last October alleging Fremont engaged in deceptive lending practices in making subprime loans statewide.

Fremont has denied those charges.

Today's agreement would require WMD Capital Markets, which recently purchased a portfolio of Fremont-originated loans, to reduce the interest rates -- and payments -- on those Massachusetts mortgages to their lower, introductory rate. Borrowers would also be credited for loan fees, unpaid late charges and unpaid interest, the state said.

Borrowers who cannot afford their homes will receive relocation payments ranging from $10,000 to $25,000.

"We continue to make progress in our litigation against Fremont for creating and selling to Massachusetts residents thousands of loans that we allege to be unlawful under our Consumer Protection Act," Coakley said in a statement.
(By Kimberly Blanton, Globe staff)