More than 500 checks totaling approximately $5 million in payments have been issued by the former Option One Mortgage Corp. to borrowers who were victims of predatory lending practices, Attorney General Martha Coakley’s office announced Friday. 

More than 500 Massachusetts borrowers who received loans from Option One between 2004 and 2007 have been sent checks ranging from $5,000 to $25,000. 

The fines were part of a settlement reached in 2011 by the attorney general’s office and Sand Canyon Corp. (formerly Option One Mortgage Corp.), a subsidiary of H&R Block Inc. Option One agreed to pay $9.8 million to settle claims it had engaged in discriminatory and unfair lending practices which resulted in minority borrowers being overcharged for mortgages.  

Coakley touted the settlement’s requirement that the bank offer loan modifications which reduce the amount of principal owed to troubled borrowers as evidence that principal reductions could be a helpful tool to keep borrowers in their homes. Coakley has called for the replacement of Ed DeMarco, head of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, because DeMarco has refused to permit principle reduction mods for those entity’s loans. 

 “We are pleased to see that borrowers victimized by unsound lending practices are receiving meaningful relief,” Coakley said in a statement. “The results from this settlement demonstrate that loan modifications providing principal forgiveness can directly and substantially assist struggling homeowners and help restore a healthy economy to our commonwealth.” 

To date, 812 borrowers have received loan modifications through the settlement, resulting in an estimated $85.8 million in principal reduction and more than $38 million in monthly payments reduced. 

The attorney general’s suit against Option One was the first in the country to allege that subprime mortgage lending practices violated civil rights laws.