Attorney General Martha Coakley’s office has reached an agreement whereby Calif.-based WMD Capital Markets will purchase “structurally unfair” loans originated in Massachusetts by Fremont Investment & Loan of San Jose.

The agreement was sought in order to avoid unnecessary foreclosures and account for Fremont’s allegedly unfair and deceptive lending practices, which are the subject of a law enforcement action against the company. The arrangement will affect about 200 Massachusetts loans, the AG’s office said.

Under terms of the agreement, WMD has agreed to:

• Permanently reset the applicable interest rate to the borrowers’ introductory rate. 

• Issue a loan credit and one-time charge-off of origination fees, unpaid past due interest, unpaid late charges, and all unreimbursed corporate and property-related advances (including all foreclosure and litigation costs) once eligible borrowers make their first payment on their revised loan.
• Further reduce the monthly payment to a level that the borrower can afford for up to three years for eligible borrowers who cannot afford monthly payments at their introductory interest rate. This will give most borrowers a chance to either get their income up to a level where they can afford the introductory payments or to refinance into a different mortgage loan. 
• Offer delinquent borrowers a relocation payment for one year after the agreement. The payment will range from approximately $10,000 to $25,000.  Borrowers will have the option of either pursuing a loan modification or accepting a relocation payment, which is designed to help those borrowers who are unable to afford their mortgage loan, even after a downward adjustment of the monthly payment.