Ohio AG Sues Carrington For Unfair Practices

Posted by Orb Staff on August 03, 2009 No Comments
Categories : Mortgage Servicing

ttorney General Richard Cordray and the Ohio Department of Commerce have [link=http://www.ag.state.oh.us/press/09/07/pr090731.asp][u]filed[/u][/link] a lawsuit against Santa Ana, Calif.-based Carrington Mortgage Services LLC alleging that the company breached its agreement with the state to offer reasonable loan modifications to eligible borrowers. The lawsuit also [link=http://www.ohioattorneygeneral.gov/press/09/07/Carrington_Complaint07312009.pdf][u]alleges[/u][/link] that 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. Cordray is the first attorney general in the nation to file suit against a mortgage servicer in the wake of the foreclosure crisis. ‘This lawsuit makes it clear that we have reached zero tolerance for this kind of behavior from loan servicers,’ says Cordray. ‘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.’ In January 2008, Cordray's office and the Ohio Department of Commerce entered into an agreement with Carrington to resolve a dispute arising from the state's litigation with New Century, whose servicing assets Carrington acquired. The agreement required that Carrington engage in ‘good faith’ loan workout negotiations with eligible New Century borrowers in order to avoid foreclosure. The agreement entitled borrowers to reasonable loan workouts, forbearance restructuring agreements or other resolutions acceptable to both the borrower and Carrington. According to the lawsuit, filed in the Franklin County Court of Common Pleas, Carrington breached the agreement by failing to provide borrowers with workout terms reasonably designed to avoid foreclosure, did not provide a written copy of the terms to the state and failed to provide proposed terms to borrowers within the 21-day time frame allocated in the agreement. Cordray's charges that Carrington violated Ohio's Consumer Sales Practices Act accuse the company of pressuring borrowers into signing unfair, unreasonable and one-sided loan modification documents. The lawsuit seeks consumer restitution, civil penalties and damages as a result of the breach of the agreement. It also requests that the court order Carrington to implement processes designed to provide "efficient, competent and adequate" customer service to all of its Ohio mortgage customers. Carrington spokesperson Chris Orlando told the [link=http://online.wsj.com/article/BT-CO-20090731-715682.html][u]Wall Street Journal[/u][/link] that the suit is "meritless." SOURCES: [link=http://www.ag.state.oh.us]Office of Ohio Attorney General Richard Cordray[/link], [link=http://www.wsj.com]Wall Street Journal

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