Ohio AG sues home loan company

Richard Cordray (D)

COLUMBUS, Ohio (Legal Newsline)-Ohio Attorney General Richard Cordray is suing Barclays Capital Real Estate Inc. for allegedly not helping consumers at risk of losing their homes.

Cordray, a Democrat, said the company provided "inadequate, incompetent customer service" and issued "unfair" loan modification agreements.

The lawsuit against Barclays's unit known as HomEq Servicing, seeks a court order barring the loan-servicing firm from violating Ohio consumer protection laws and fines of $25,000 for each violation.

In a statement, Cordray said HomEq, which services more than 10,000 subprime loans in Ohio, forced struggling homebuyers into entering one-sided agreements releasing the company from liability in exchange for the opportunity to keep their homes.

"There has been ample time for loan servicers to strengthen their efforts and start making a significant difference in preventing home foreclosures," Cordray said. "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."

HomEq is a participant in the $75 billion federal Home Affordable Modification Program, which provides qualified borrowers with a trial loan modification.

Federal data indicates that the Los Angeles County and Orange County region of Southern California accounted for nearly 6 percent of all the temporary and permanent loan modifications made under the White House program.

Nationally, Bank of America Corp. led mortgage servicers making 158,562 trial modifications as of this month. JPMorgan Chase & Co., had 143,027 trial modifications, while CitiMortgage Inc., a unit of Citigroup Inc., had 103,478 trial modifications. GMAC Mortgage Inc. had 28,275.

From Legal Newsline: Reach staff reporter Chris Rizo at chrisrizo@legalnewsline.com.

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