Ohio AG Files Suit Against Mortgage Servicer

Ohio attorney general Richard Cordray filed a lawsuit against American Home Mortgage Servicing Inc., 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, including 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.

"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," said AG Cordray in a statement. 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.

In addition, the complaint maintains that many consumers have complained to the AG's office that the company's call center workers "do not return calls or respond to repeated inquiries."

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.

Representatives from AHMSI could not be reached for comment.

The filing against AHMSI in Cuyahoga County Common Pleas Court marks the second lawsuit the Ohio AG's office filed against a loan servicer. In July, AG Cordray sued loan servicer Carrington Mortgage Services for unfair and deceptive loan modifications.

The case against Carrington 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.