Ohio's attorney general is suing American Home Mortgage Servicing — a business controlled by the vulture fund investor Wilbur Ross — accusing the company of "incompetent and inadequate customer service."
Attorney General Richard Cordray levied several charges against American Home last week, including failure to offer loan modifications on a timely basis and "unfair and deceptive" loan practices.
According to the lawsuit, American Home required loan modification agreements that forced consumers to pay excessive fees and waive their rights in order to get help. The complaint also alleges that the terms of loan modifications were unconscionably one-sided in favor of American Home.
Ross built the servicer from two failed nonprime servicers: Option One Mortgage Corp. of Irvine, Calif., and American Home Mortgage Investment Corp. of Melville, N.Y.
Ross' outfit, based in Coppell, Texas, services more than 12,000 subprime and prime consumers in Ohio, according to the attorney general. Cordray is seeking a permanent injunction against the company.
The servicer is fighting back. It is countersuing the state and says the allegations are false and cannot be supported.
Jordan Dorchuck, an executive vice president at American Home Mortgage Servicing and its chief legal officer, said it is committed to "keeping borrowers in their homes."
The company said it tried to meet with Cordray to discuss the issues raised in the lawsuit, but the state refused.