November 9, 2009
Consumers in the process of trying to modify a mortgage repeatedly complain that mortgage servicers appear to go out of their way to try to sabotage the effort. The State of Ohio agrees, suing one mortgage servicer for "incompetent and inadequate customer service, failure to respond to requests for assistance, failure to offer timely or affordable loss mitigation options to borrowers and unfair and deceptive loan modification terms."
Ohio Attorney General Richard Cordray is suing American Home Mortgage Servicing Inc. (AHMSI), a Texas-based company servicing more than 12,000 subprime and prime mortgage loans in Ohio. The lawsuit alleges numerous violations of the Ohio Consumer Sales Practices Act. Cordray says Ohio is attempting to hold servicers accountable in the wake of the foreclosure crisis.
"For far too long there has been little to no accountability for those who take advantage of the dire circumstances of home foreclosure," said Cordray. "The acts of some mortgage servicers have gone beyond the point of being negligent-they have become predatory financial practices and in Ohio, they won't be tolerated."
According to the lawsuit, AHMSI required loan modification agreements that forced consumers to pay excessive fees and waive their rights in order to get help. The suit also alleges that the terms of loan modifications were unconscionably one-sided in favor of AHMSI.
The lawsuit seeks a permanent injunction from the continuation of unfair and deceptive loan modification practices, consumer restitution, civil penalties and damages. It also requests that the court order AHMSI to implement processes designed to provide efficient, competent and adequate customer service to all of its Ohio mortgage customers.
In July, Cordray was the first state Attorney General to sue a loan servicer for unfair and deceptive loan modifications. The case against Carrington Mortgage Services, LLC., is currently in litigation in Franklin County Court of Common Pleas. As of Sept. 30, Carrington implemented a voluntary 60-day moratorium on home foreclosures.
