Ohio AG, Loan Servicer Trade Lawsuits Over Legality Of Firm's Business Practices

In Cleveland, Ohio, Reuters reports:

• American Home Mortgage Servicing and Ohio's Attorney General on Thursday filed lawsuits against one other marking the latest battle between a U.S. state and firms charged with easing payments for troubled home owners. American Home, owned by billionaire investor Wilbur Ross, said its lawsuit disputes the state's allegations of unfair practices, which were affirmed later as Attorney General Richard Cordray announced he had sued the Coppell, Texas-based mortgage servicing company.

• It is the second offensive by Cordray against mortgage servicing companies that are on the front lines of state and federal efforts to stop foreclosures plaguing the economy. Among complaints, Cordray said American Home forced consumers to pay excessive fees and waive rights in order to get help, and that contracts to ease terms on loans were "unconscionably one-sided" in favor of the company.

For more, see American Home, Ohio AG sue each other over mortgages.

For the Ohio AG press release, see Cordray Files Second Suit Against Mortgage Servicers:

• The lawsuit alleges numerous violations of the Ohio Consumer Sales Practices Act including but not limited to: 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 Ohio AG warns consumers to watch for the following red flags when entering into a loan modification with a loan servicer:

• Agreements in which you waive your right to take legal action against the servicer or to challenge the foreclosure process. Look for words like “borrower has no right of set-off or counterclaim” or “no defense related to the loan or the property,”
• Demands for advance payment of extra fees not included in the agreement, such as taxes, attorney fees and insurance costs,
• Failure to return your calls or respond to inquiries in a timely matter,
• Failure to respond to you entirely,
• Lost documents.