Appellate Judge Affirms Injunction Preventing Freemont From Proceding With Foreclosures Of Subprime Mortgages In Massachusetts

In a prior post (here), we analyzed the temporary injunciton entered by a Massachusetts superior court judge effectively preventing Freemont Investement and Loan from foreclosing on any subprime mortgage loans issued to any Massachusetts borrowers without obtaining prior approval from the State Attorney General's Office or from the court. The judge held that Freemont violated the state's deceptive trade practices act through its subprime lending practices.

On May 5th, the Massachusetts Attorney General announced that the trial court judge's imposition of the temporary injunction had been upheld on appellate review. The appellate justice's May 2nd ruling, according to the Attorney General, "specifically notes that the trial court's decision was broadly supported not only by Massachusetts statutes but by a number of federal regulations that addressed the unfairness inherent in Fremont’s loan products."

In other developments in the case, the Massachusetts AG also obtained a modification of the injunction to include a prohibition on Freemont from selling or assigning its mortgages or servicing obligations to another company unless the buyer agrees to abide by the terms of the preliminary injunction setting forth the foreclosure approval process. This came about because shortly after the injunction was entered, Freemont announced its intent to sell hundreds of Massachusetts mortgages to a company called Carrington.