Ohio Attorney General Richard Cordray has announced a lawsuit filed against Barclays Capital Real Estate d/b/a HomEq Servicing, headquartered in New York, for issuing unfair loan modification agreements and providing inadequate, incompetent customer service to Ohioans who were at risk of losing their homes to foreclosure. HomEq is a participant in the federal Home Affordable Modification Program (HAMP).
According to the lawsuit filed in Montgomery County Common Pleas Court, Ohio homeowners in need of loan modifications through HomEq to save their homes from foreclosure were forced to enter into one-sided agreements. The unfair and deceptive agreements released HomEq of all liabilities and required borrowers to waive their rights to defenses and agree to pay additional fees.
Additionally, the lawsuit alleges that HomEq violated Ohio’s Consumer Sales Practices Act (CSPA) through incompetent and inefficient customer service by failing to return consumer calls or respond to repeated inquiries, losing borrowers’ documents and failing to offer timely and affordable loss mitigation options.
“There has been ample time for loan servicers to strengthen their efforts and start making a significant difference in preventing home foreclosures,” said Cordray. “Unfortunately, many servicers have instead repeatedly chosen to aggravate the crisis through noncompliance and excuses. As I see it, for every excuse, hundreds of families become more vulnerable to losing their homes. In Ohio, we have zero tolerance for any more excuses.”
The lawsuit seeks a permanent injunction from the continuation of unfair and deceptive loan modification practices as well as consumer restitution, civil penalties and damages. HomEq services more than 10,000 sub-prime loans in Ohio and became a HAMP participant in August. According to the December Servicer Performance Report issued by the U.S. Treasury, it is one of the lowest performing servicers in terms of loan modifications initiated.
The lawsuit against HomEq marks the third filed by Cordray against a loan servicer operating in Ohio. In July, Cordray became the first state attorney general to file a lawsuit against a servicer for CSPA violations. That lawsuit, filed against Carrington Mortgage Services, is pending in the Franklin County Court of Common Pleas. Carrington recently issued its third, 60-day moratorium on home foreclosures in response to the lawsuit.
On Nov. 5, 2009, Cordray filed a lawsuit against American Home Mortgage Servicing Inc. for numerous CSPA violations including issuing unfair or deceptive loan modifications to Ohioans. The case is currently pending in Cuyahoga County Common Pleas Court.
For more information, visit www.OhioAttorneyGeneral.gov.