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Ohio Sues Mortgage Servicer for Incompetence in Failing to Modify Loans

November 13, 2009

Our San Bernardino loan modification attorneys have long believed that loan servicers aren't doing everything they could to help homeowners who've applied for loan modifications. So we were pleased to see an article in the Columbus Dispatch Nov. 6 saying that Ohio's attorney general has taken action against at least two banks he believes have violated the law by failing to reasonably consider loan modifications. Attorney General Richard Cordray sued American Home Mortgage Servicing for violating the Ohio Consumer Sales Practices Act with its sluggish responses to loan modification applications. It's the second such lawsuit by the attorney general's office, following a July suit against Carrington Mortgage Services of California.

According to the article, the attorney general alleges that American Home has ignored requests from borrowers; provided "incompetent" customer service; failed to modify loans in a timely manner and offered unfair and deceptive terms when it did modify loans. It wasn't clear from the article whether prosecutors believe American Home did this intentionally or through bad management. The office said it has received 119 complaints about the Texas-based company, which is the second-biggest subprime loan servicer in the country. American Home responded aggressively to the suit, filing a lawsuit of its own seeking a court's declaration that it is in compliance with Ohio law. Cordray dismissed this as a "sideshow" and said lawsuits against other services may be coming.

As Garden Grove loan modification lawyers, we are delighted to see someone calling out loan servicers for their apparent inability or unwillingness to modify loans. As we have written on this blog, we believe loan servicers have chosen not to modify loans because they believe (rightly or wrongly) that they can make more money by allowing the loan to go into foreclosure. That was confirmed most recently by a National Consumer Law Center study in which researchers simply "followed the money" and found that loan modifications cost money for loan servicers, but foreclosures can actually generate fees for servicers, who often don't have a stake in actual repayment. Rather than simply refuse to offer loan modifications, however, lenders have continued to offer them -- but in a way that we think is designed to ensure that few are completed. Thus, millions of borrowers continue plugging away at a system not designed to do what they desperately want it to do.

At Howard Law LLP, we fight back on behalf of borrowers who have gotten the runaround from their loan servicers while their homes are at risk. Our Colton loan modification attorneys have a strong record of success modifying the length, interest rate or even structure of our clients' loans. We attribute part of this success to the fact that we are attorneys -- and banks know that a lawsuit may be close behind. In fact, we start our loan workout cases by reviewing the loan's history for signs of predatory lending or other illegal activity. We will negotiate aggressively with lenders, and file a lawsuit whenever necessary, to stop an illegal loan, an imminent foreclosure or another unfair situation. We want to leave our clients in a better financial situation than they were in before, whether that means a lower monthly payment, a short sale or another major change.

If your home is at risk and your loan servicer won't respond in a timely manner to your calls and letters, you should talk to Howard Law today. To learn more about your legal rights at a free consultation, please send a message through our Web site or call 1-800-872-5925 today.