Fremont General Corp. was accused of using “unfair and deceptive” practices to sell subprime mortgages.

In a lawsuit filed by Massachusetts’s Attorney General Martha Coakley, the Santa Monica-based lender was accused of selling loans in Massachusetts that were “designed to fail.”

“Fremont’s loan selling conduct has significantly contributed to the foreclosure crisis in Massachusetts,” Coakley said in a statement.

Fremont released a statement that said the “lawsuit is without merit.”

The suit is seeking civil penalties and is asking the court to prohibit Fremont from reselling mortgages it originated in Massachusetts. Coakley also asked the court to give her office a 90-day period to review any foreclosures by the company in the state.

This is yet another hit for the troubled lender, which announced last week that a rescue plan announced earlier this year involving Texas billionaire Gerald Ford had fallen through.

Shares in Fremont closed down 1.5 percent to $3.94 Friday.