Servicing 9,700 Option One Mortgage Corp.-originated mortgages in Massachusetts just got a little bit more difficult for American Home Mortgage Servicing Inc., after the state's AG won a preliminary injunction against the now-defunct lender on Wednesday afternoon. The order, granted Monday by Judge Ralph D. Gants in Suffolk Superior Court, prohibits Option One and AHMSI from initiating or advancing foreclosures on mortgage loans that are considered “presumptively unfair” under the terms of the court order. AHMSI must instead give the state AG's office at least 30 days notice before it intends to foreclose on any such loan, and, if the Attorney General objects, obtain approval from the court before foreclosing on a loan. American Home purchased Option One's servicing platform from H&R Block, Inc. (HRB) earlier this year. “We are pleased by the court’s decision and the relief it will afford, both to homeowners and to the communities suffering from the effects of Option One’s loans,” said Attorney General Martha Coakley. “The economic crisis continues to worsen, and predatory subprime lending is at the core of the problem. We intend to hold accountable those who engaged in such unlawful lending conduct.” Rhetoric aside, HousingWire spoke to a few attorneys that work in the default management space, and may represent AHMSI, who said the court order would likely to little to change the amount of time it takes to process a foreclosure in the state. "Really this just means that when a filing is on its way, a process has to be put in place to notify the AG's office," said one attorney, who asked not to be named in this story. "The question is how many loans are 'presumptively unfair,' and how many foreclosures the state AG actually intends to object to." Another source mused that Coakley's office was opening itself up to potential investor lawsuits for blocking a valid foreclosure, for damages and incurred carry costs should the state AG's office decide not to allow a foreclosure to take place. Coakley's office filed suit against Option One and its parent company, H&R Block, Inc., back in June 2008, alleging that they originated thousands of risky subprime loans in Massachusetts, "with reckless disregard as to whether borrowers would be able to afford their loan payments." According to the complaint, filed in Suffolk Superior Court, Option One and H&R Block "engaged in unfair and deceptive conduct on a broad scale by selling extremely risky loan products to Massachusetts consumers that the companies knew or should have known were destined to fail." The complaint also alleges that the companies discriminated against black and Latino borrowers in the state, by charging them higher points and fees to close their loans than similarly situated white borrowers and by targeting black and Latino consumers with marketing that pushed the sale of predatory loan products. Under the terms of the injunction, if mortgages meet certain characteristics which make them “presumptively unfair,” AHMSI may not foreclose upon such loans without giving the AG 45 days review the case and object. If the Attorney General’s Office objects, the parties have 15 days to resolve their differences and discuss alternatives, such as an affordable loan modification. If they cannot reach a mutually agreeable resolution in this time period, then AHMSI may only proceed with a foreclosure if it receives court approval. Should the state AG's office object to a fair number of loans, it could add to the amount of time it takes to process a foreclosure, driving up costs for insurers and investors. This is the second lawsuit that the Coakley's office has filed against subprime and Alt-A lenders in the state. In Oct. 2007, the AG filed a similar case against California-based Fremont General and Fremont Investment and Loan, and subsequently obtained an injunction that prohibits Fremont from initiating or advancing foreclosures on presumptively unfair loans. Write to Paul Jackson at paul.jackson@housingwire.com.