If you think that this lawsuit is because H&R Blocks mortgage unit, Option One Mortgage, failed to lend to minorities and over charged them, you would be partial right.

According to the suit minorities were overcharged. What is interesting is that they are also being sued because they actually made the loans available to people of color. Typically in minority discrimination lawsuits the charges are because they are denied access to capital or at inflated rates.

Now H&R is being sued because they made loans to minorities that were dangerous to them due to a high potential of default.

Color me confused but I am not sure if this is just political grandstanding or a genuine attempt to say that a group of people should not have been lent money they asked for?

What would have happened if Option One stated that they were not going to lend money to minorities because the loans would have been too risky for them but made the same loans to whites in the same economic demographics. They would have been rightly subject to incredible lawsuits, public condemnation, and ridicule.

These types of lawsuits by government officials are a terrible abuse of power by a governmental agency and will further make doing business for mortgage providers in Massachusetts more difficult. And when things are difficult they become more expensive for the general population thus hurting the same Attorney General’s constituency.

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

The complaint said the H&R Block unit charged black and Latino borrowers higher points and fees to close their loans than similarly situated white borrowers and targeted black and Latino consumers with marketing “that pushed the sale of predatory loan products.”

“Marketing loan products that were designed to fail not only harms individuals and families who are struggling to afford their homes, but also has a negative impact on neighboring homeowners and the community at large,” Coakley said in a statement. via Yahoo! News.

Hat tip to Morgan Brown for finding this story.

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