Monday, November 25, 2013

Commonwealth v. Fremont Investment & Loan case brief

Commonwealth v. Fremont Investment & Loan case brief summary
897 N.E.2d 548 (Mass. 2008)

The Suffolk Superior Court (Massachusetts) granted a preliminary injunction that restricted, but did not remove, defendant mortgage company's ability to foreclose on loans with features that the trial court labeled as "presumptively unfair." The mortgage company appealed the trial court's ruling and the state supreme court granted plaintiff Commonwealth's application for direct appellate review.

The Commonwealth, acting through the Attorney General, commenced a consumer protection enforcement action against the mortgage company, claiming that it, in originating certain "subprime" mortgage loans in Massachusetts, acted unfairly in violation of Mass. Gen. Laws ch. 93A, § 2. The trial court granted a preliminary injunction in favor of the Attorney General after concluding that in originating home mortgage loans with four characteristics making it almost certain that the borrower would default, the mortgage company had committed an unfair act or practice under MA law.


  • The state supreme court found that: 
  • (1) the record supported the conclusion that the mortgage company, in originating such loans, acted unfairly in violation of Mass. Gen. Laws ch. 93A, § 2, 
  • (2) the trial court properly found that because borrowers were unlikely to be able repay the loans, the loans violated the Massachusetts Predatory Home Loan Practices Act, Mass. Gen. Laws ch. 183C, § 4, and, thus, also violated Mass. Gen. Laws ch. 93A, § 2, 
  • (3) the mortgage company did not show any authority permitting the alleged unfair practice, and 
  • (4) the preliminary injunction served the public interest.
The state supreme court affirmed the granting of the preliminary injunction by the trial court and ordered that the case be remanded to the trial court for further proceedings.

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