The Commonwealth of Massachusetts distributed $1.75 million to minority borrowers that it says were discriminated against by Sand Canyon's (formerly Option One) lending practices.

Sand Canyon, a subsidiary of H&R Block, denies that it engaged in unfair and deceptive loan origination and servicing practices.

The Massachusetts attorney general's office said more than 2,100 affected borrowers throughout the state will receive checks, ranging in payment from $100 to $5,000, with an average payment of $816.

“Option One made loans that it knew were likely to fail and it discriminated against African-American and Latino borrowers,” Mass. AG Martha Coakley said in a statement.

The payments to minority borrowers are a part of the settlement the AG office entered into last August, in which Option One agreed to pay $9.8 million to resolve claims of discriminatory and unfair mortgage lending practices.

In the lawsuit, the AG alleged that H&R Block’s discretionary pricing policies gave mortgage brokers free rein to charge excessive and unjustified fees, causing black and Latino borrowers to pay more money, on average, for their loans than other similarly situated borrowers.

In 2008, when the lawsuit was filed, it was the first by a state’s AG’s office alleging civil rights claims against a subprime lender. 

The office said that borrowers will receive claims forms in the coming weeks. The AG anticipates distributing more checks totaling $6 million to other Option One borrowers, who received their loans between 2004 and 2007.

jhilley@housingwire.com

@JustinHilley