Ohio AG Sues Carrington on Modification Shortfalls

Ohio Attorney General Richard Cordray’s office filed a joint lawsuit with Ohio’s Department of Commerce against Carrington Mortgage Services. The lawsuit alleges Carrington violated Ohio’s Consumer Sales Practices Act by not following through with a commitment it made to the state to provide mortgage modifications to distressed homeowners. The suit also claims Carrington failed to provide a written copy of its modification terms to the state and borrowers. “This lawsuit makes it clear that we have reached zero tolerance for this kind of behavior from loan servicers,” Cordray said in a statement. “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.” The modifications were promised in an agreement Carrington previously made with the AG and Commerce Department in January 2008 to resolve a dispute over its servicing practices in the state. According to that agreement, Carrington was to make good faith efforts to provide modifications to eligible homeowners. “Carrington Mortgage Services owes Ohio borrowers a fighting chance at avoiding foreclosure,” Kimberly Zurz, director of the Ohio Department of Commerce, said in a statement. “Mortgage lenders and servicers need to know that this type of negligence will not be tolerated in Ohio. We will hold them accountable for their actions.” This isn’t the first time Carrington has faces allegations of unfair practices. Consumer advocacy group Neighborhood Assistance Corporation of America called Carrington CEO Bruce Rose a “financial predator” and said the company refuses to work with homeowners. The lawsuit comes at the same time that Illinois Attorney General Lisa Madigan is pursuing a lawsuit against Wells Fargo (WFC), alleging Wells engaged in predatory lending practices and so-called “reverse redlining” — the practice of targeting low income and minority borrowers to sell overpriced financial products. A number of state attorney generals are investigating a variety of mortgage industry players, ranging from Connecticut’s June investigation of government-sponsored enterprises Fannie Mae (FNM) and Freddie Mac (FRE), to an AG-filed lawsuit in New York against American Modification Agency, as well as a myriad of cease and desist orders issued to alleged foreclosure rescue scam operations across the country. Write to Austin Kilgore.