The lawsuit filed July 31 accuses California-based Carrington of breaching an agreement with the state to offer reasonable loan modifications to eligible borrowers.
The lawsuit alleges Carrington violated Ohio’s Consumer Sales Practices Act by “providing incompetent, inadequate and inefficient customer service in connection with its servicing of Ohio mortgage loans.”
Carrington denies any wrongdoing, and its representatives have said it is trying to help clients.
Cordray said he is the first attorney general in the nation to sue a mortgage servicer in the wake of the foreclosure crisis and that more lawsuits will follow.
“This lawsuit makes it clear that we have reached zero tolerance for this kind of behavior from loan servicers,” he said.
“We’ve tried to work with them, but now we must take action. I am determined to see that mortgage servicers step up, take responsibility and start making it right with Ohioans. No more excuses.”
Cordray is taking aim at 10 to 12 of the largest servicers in Ohio. The legal process of discovery will reveal more about how the servicers operate, he noted.
Servicers act as middlemen who collect mortgage payments from homeowners and pass the payments to banks who hold the loans.
An Associated Press investigation released this month found “thousands of lawsuits accusing servicers of charging illegal fees, foreclosing prematurely and otherwise preying on homeowners they’re supposed to help.”
At the same time, the report said, the U.S. Treasury Department is giving the biggest players in the services industry — Bank of America, Wells Fargo & Co., JP Morgan Chase & Co. and Citigroup Inc., — billions of dollars to modify homeowners’ mortgages to help them keep their homes. “Some of the money will go to investors and homeowners. But the servicers will pocket up to $5,500 for each loan they modify successfully,” according to the report.
A Treasury report this month indicated that only 9 percent of eligible borrowers had their mortgage payments reduced through modified loans.
“Most mortgage loan servicers are not doing enough to live up to their commitments to help keep people in their homes,” Cordray said. “What is it going to take to get these companies to change their behavior and take responsibility?”
Contact this reporter at (937) 225-7407 or sbennish @DaytonDailyNews.com.
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