Ohio sues mortgage servicing firm

AP News
Posted: Dec 17, 2009 8:22 AM

The state attorney general filed suit Wednesday against a New York-based mortgage servicing company that he claims has been poorly serving its Ohio customers.

The suit against Barclays Capital Real Estate and its subsidiary HomEq Servicing accuses Barclays of peddling one-sided agreements that require customers to relinquish certain rights, including legal remedies, and of providing inadequate, incompetent customer service.

The latest legal action, filed in Montgomery County Common Pleas Court, goes hand-in-hand with a separate effort by Attorney General Richard Cordray's office to crack down on foreclosure rescue operations in a state hard hit by the national foreclosure crisis.

Cordray says firms administering home loans must adhere to the terms of a federal Home Affordable Modification Program, or HAMP, if they want to operate in Ohio.

"Our objective is that there be clean compliance with the federal HAMP program, what many of these servicers have pledged to do," he said.

A Barclays spokesman said the company will defend itself vigorously against what it sees as a meritless complaint and continue providing quality customer service to its financially distressed borrowers.

Cordray said an investigation that followed consumer complaints found that HomEq was adding fees and onerous terms to its agreements. Among allegations in the suit are violations of the Consumer Sales Practices Act.

It's the third such lawsuit the attorney general has filed since January, and Cordray said there could be more to come. He said he hopes other states will also step up against improper mortgage servicing activity.

He said the industry has been given resources through federal and state initiatives to play an important role in bringing the nation through the economic crisis.

"Unfortunately, many servicers have instead repeatedly chosen to aggravate the crisis through noncompliance and excuses," Cordray said. "As I see it, for every excuse, hundreds of families in Ohio become more vulnerable to foreclosure and losing their homes."