DOW JONES NEWSWIRES
The state of Ohio has filed a lawsuit alleging Carrington Mortgage Services LLC breached its agreement to offer "reasonable" loan modifications to eligible borrowers.
Carrington spokesman ''Chris Orlando'' called the suit "meritless."
The state and Carrington entered a pact in January 2008 to resolve a dispute arising from the state's New Century Financial Corp. litigation, requiring the company to engage in "good faith" negotiations to help New Century borrowers avoid foreclosure.
Carrington acquired New Century's mortgage-servicing platform in a 2007 bankruptcy auction. New Century had been the second-largest provider of loans to high-risk borrowers, making it one of the earliest casualties when the housing bubble burst.
The complaint, filed by state Attorney General Richard Cordray and the Ohio Department of Commerce, also charges the company violated state law by providing "incompetent, inadequate and inefficient" service in connection with the servicing of Ohio mortgages. The suit seeks consumer restitution, civil penalties and damages as well as a court order requiring Carrington to improve its customer service.
"This lawsuit makes it clear that we have reached zero tolerance for this kind of behavior from loan servicers," Cordray said. "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."
Responding to the suit, Orlando said the company is committed to helping borrowers, having modified loans for about half of its customers.
"We regret that the Ohio Attorney General has declined our offer to continue to work constructively to help homeowners and has instead chosen to pursue meritless litigation against the company," Orlando said.
-By Jay Miller, Dow Jones Newswires; 212-416-2355; email@example.com