American Home Mortgage Faces Servicing Lawsuits

Wilbur Ross’s American Home Mortgage Faces Servicing Lawsuits
By David McLaughlin – Oct 28, 2010 8:59 AM ET

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W.L. Ross & Co. CEO Wilbur Ross

Wilbur L. Ross Jr., chairman and chief executive officer of W.L. Ross & Co. LLC. Photographer: Ramin Talaie/Bloomberg

Billionaire Wilbur Ross’s American Home Mortgage Servicing Inc., facing lawsuits by attorneys general in two states, was sued by a homeowner who accused the firm of using tactics that lead to improper foreclosures.

The lawsuit, filed Oct. 25 in federal court in Dallas, seeks class-action status on behalf of homeowners with mortgages serviced by American Home going back to 2006. American Home’s “illegal, unfair and deceptive business practices victimize borrowers” across the U.S., according to the complaint.

American Home “routinely and systematically assesses unwarranted fees against consumers, resulting in premature default that often gives rise to unfair and improper foreclosure proceedings,” according to the complaint.

Banks and loan servicers are under scrutiny for their foreclosure practices following accusations they relied on faulty documentation to foreclose on people’s homes. Attorneys general in all 50 states have launched a coordinated investigation into the issue.

The complaint in Dallas, filed by Kay VanHauen of Sanger, Texas, follows lawsuits by Greg Abbott, the state’s attorney general, and Ohio Attorney General Richard Cordray. They separately sued American Home, based in Coppell, Texas, for alleged violations of consumer protection laws.

Tim Metz, a spokesman for Wilbur Ross, said yesterday Ross wasn’t available to comment. Metz didn’t return a call for comment today.

Ross, 72, is chief executive officer of WL Ross & Co., a company that specializes in reorganizing distressed companies. He founded the New York-based company in 2000 after overseeing the bankruptcy practice at Rothschild Inc.

Ross Acquisition

WL Ross bought American Home from its bankrupt lender parent in 2008, and later added operations and servicing contracts from H&R Block Inc., Citigroup Inc. and Taylor, Bean & Whitaker Mortgage Corp. Servicers collect payments from homeowners, negotiate loan modifications and foreclose on properties when borrowers default.

In an Oct. 23, 2008, interview with Bloomberg Radio, Ross said American Home was the second-largest servicer of subprime mortgages in the U.S. and was “eager” to continue expanding. The company has servicing operations in Irvine, California, Jacksonville, Florida, and Pune, India, according to its website.

In his lawsuit, the Ohio Attorney General said American Home required borrowers to sign loan modifications, forbearance agreements and security-retention agreements that contain “illegal and unfair provisions and are unconscionably one- sided” in the company’s favor. American Home also provided “incompetent, inadequate and inefficient customer service,” lost documents and failed to respond to requests by borrowers for assistance, according to the complaint.

‘Predatory’ Practices

“The acts of some mortgage servicers have gone beyond the point of being negligent — they have become predatory financial practices and in Ohio, they won’t be tolerated,” Cordray said in a statement on Nov. 5, when the lawsuit was filed.

The Texas Attorney General said in his lawsuit that American Home fails to properly credit homeowners for payments made on their mortgages; falsely claims borrowers didn’t make payments in order to justify late fees; and refuses to accept payments allegedly because a borrower is in default, thereby adding more late charges. The result, Abbott said, is to render homeowners in default on their mortgages.

“The cumulative effect of the foregoing acts and practices was to place more homes into foreclosure than there should have been,” Abbott said in the Aug. 30 lawsuit.

American Home is among 30 banks and mortgage companies that Abbott wrote to on Oct. 4, demanding they halt foreclosures in the state until they ensure that foreclosures that relied on faulty documents “will be rectified” and that future foreclosures are done with “legally correct documentation.”

‘Tighter Controls’

American Home has been reviewing its procedures and is placing “tighter controls” on document signing and notarization, according to the attorney general’s office. The company found “a very limited number of cases” in which a person signing a document may not have done so in the presence of a notary, according to the attorney general.

The lawsuit by VanHauen, the Texas homeowner, mirrors allegations made by the attorney general. American Home, she said, misapplied mortgage payments on two loans in September 2008 and improperly assessed fees and other charges. After notifying American Home about the problem, the company refused to correctly apply the payments. It treated the loan as being in default and initiated foreclosure proceedings, according to the complaint.

Insurance Charge

American Home also charged her for a homeowner insurance policy she didn’t need and charged her for property taxes she was paying to the county, according to the complaint. VanHauen proposed that her lawsuit cover homeowners who have similar complaints against American Home.

American Home is facing similar allegations in other lawsuits. In an April lawsuit filed in federal court in Baltimore, Michael and Ingrid Landi of Frederick, Maryland, accused American Home of falsely claiming in October 2009 that they had not made mortgage payments. American Home has asked the court to dismiss the complaint.

In a complaint filed in May in federal court in San Diego, American Home was accused of foreclosing on a home while it was discussing a loan modification with the owner, Kenneth Coplin. Coplin said in his complaint that American Home assured him it didn’t intend to foreclose or sell the property “in an effort to conceal” its intention to “mislead” him and “steal” the property.

The cases are Kay VanHauen v. American Home Mortgage Servicing Inc., 10-02146, U.S. District Court, Northern District of Texas (Dallas); State of Texas v. American Home Mortgage Servicing Inc., 2010-3307, District Court of El Paso County, Texas; State of Ohio v. American Home Mortgage Servicing Inc., 09-708888, Court of Common Pleas, Cuyahoga County, Ohio; Michael Landi v. American Home Mortgage Servicing Inc., 10-00921, U.S. District Court, District of Maryland (Baltimore); Kenneth Coplin v. American Home Mortgage Servicing Inc., 3:10-cv-01096, U.S. District Court, Southern District of California (San Diego).

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

24 Responses

  1. […] American Home Mortgage Faces … – 29.10.2010  · Wilbur Ross’s American Home Mortgage Faces Servicing … Home Mortgage Faces Servicing Lawsuits … Kay VanHauen v. American Home Mortgage … […]

  2. I sent over 70 pages of documents (twice) trying to save my home with this so called company “American Home Mortgage” we should call this “American Home Theft Company” lets us steal your house from you…by driving you insane with paper work that is either thrown away or at the bottom of the stack..can anyone help me after the fact….I now
    have 8 days to walk away from a house that I have had since 2006 and tried to save due to a divorce….I was a single parent at the time trying to handle 2 mortgages and did a good job until the economy dropped out….I was only trying to hold on to an obligation I had with this company and trying everything I could to make the payments, modifications I thought were supposed to help you, not help you loose your house….. and they did not care about helping you just over charging you so you can’t …Is there a attorney that is willing to help all of us out….If so please contact me…..Margaret Rowland

  3. Dear Vedika,
    That would be fine. Thank you for your efforts in standing up for justice. We wish you the very best of success.
    Sincerely,
    Katherine

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  5. On Fri, Mar 23, 2012 at 8:11 PM, angel marie wrote:

    I have a question.. .I have been working, or so i thought, with my mortgage company for about 2 years now, and I’m now, I’m 64, thousand in the hole… My house was built in 1959… i have a loan to my mortgage for 170,000thats everything with whats owing included. . i got in this interest only loan, ( A. M. H. M. S. I.) keeps saying, question 9… wasn’t checked, or they didn’t receive the right statement, so they shredded it, so i have to re send this, and that , over and over again,but just the other day, i open my door to see a notice taped upside down,saying they are selling my home for 221,735,000 on April 16,2012 at the concord Hilton …that’s more than i refinanced my home for in 2007… and the the next two days, i receive another letter, saying it is is incomplete, again and to resend, yet all my papers that have been faxed I have copies of all and today i receive two letters saying my note was sold in Florida on march 12,2012… but in the next letter it states it will be sold again in April 16 at the Hilton, if i dont respond immediately .. .. I’m so confused, now today i call (A M H M S I) and they say they only need two statements to have them find a negotiator I’m worried in three weeks while I’m hoping to save my home they will sell it from under me I’m disabled with p.t.s.d i have a fixed income one roommate that pays and has been moved in since Feb 2012 and i receive 400 in back child support if i can get a modified loan i can gladly pay it and this is the only home i have had since 1998 my son grew up here and he is going through some stressful issues and I’m currently writing a book to get all the traumatic events out on paper, i have no where else to turn, i just talked to a dear friend, who commends your work, and asked me to at least try you before its too late, and i have no place to live, or go. .I stay positive, i help everyone i can, but when its close to home it doesn’t work, if there’s anyway you can send ME A ANGEL… I’d be so blessed from my soul, if you cant, i do understand, its hard these days, but i have to try, or i wont feel like i didn’t give it my all, i dont know if i have a case, or if they are black balling me I’m one voice, but i do believe One voice CAN make a difference, HELP me make that difference… Many blessings to you, and yours in Love & light. (so must it be)…
    925-969-7855
    SEND ME AN ANGEL 925-497-1436
    Miss dawnmarie Vetrano(angel)

  6. i am texas just sued them in travis county . willing to discuss this would like to get other tetexas plaintiffs to see can do anything . i just got tro against and have had all the problems you have had.

  7. I am having problems with my AHMSI mortgage. In 2009 I contacted AHMSI about trying to refinance my home to lower my payments. I did not want any money out of the deal, just a lower monthly payment. I did not understand the rep from India, and they repeatedly sent me the wrong information. In December of 2009 I again contacted AMHSI about my options, as I was going to propose to my girlfriend and I knew we would be moving into her home when we got married…and I did not want my home to become an “investment property”… no help! In July 2010 I had my last conversation with them about this topic, and they ackwoledged my repeated conversations with them about this, but again offered no help. My wife and I were married in August of 2010, and the property is now considered an “investment property”. In February 2011 I was placed on a temporary layoff, and I fell behind on my payments. I have been trying to work with them, but I am working wherever and whenever I can, twice as hard for half as much, and I do not have the time during the day, or the power at night to track down all of the paperwork they need to put together a shortsale in lue of a forclosure. I have placed the home on sell about 3 times now, but the home is obviously(due to the economy) worth about 70% of what I owe on it and now they want to take it. Is there an option for recourse with AHMSI?

    I have to laugh about some of the things too…for example, the day after i was placed on a layoff, I called AHMSI about my situation (to be proactive), and the rep told me “well you are current on your payments, so call back when you are behind on your payments and we can help you then”. I called again on the 14th of March, and recieved the same response from the second rep. Now, that I am 2 months behind on my payments, they call me every hour wondering “why” i cannot make a payment, and short of telling each one about my situation, I tell them to read about my story and hang up.

    I have more complaints (poor customer serivce, horrible direction, etc.) but I didnt know if I would even get a response out of this comment.

    Please call me if you can help me. I currently have a renter in the home for half of the mortgage, but being unemployeed and covering my family costs and half of a mortgage, etc. I cannot make a payment ( and they do not accept partial payments).

    I have contacted everyone from the Idaho Senate, to other mortage companies trying to refinance this home or somethign. I do not want to give it away, and I wont, but need some help to figure this one out.

    Thank you,

    Scott 208.964.0481

  8. Greetings! This is my 1st comment here so I just wanted to give a quick shout out and say I truly enjoy reading your articles. Can you suggest any other blogs/websites/forums that cover the same topics? Many thanks!

  9. I’m thinking about contacting the Texas attorney general about amhi. Any advise?

  10. The amount of on-line internet directories helps make discovering stuff faster and easier .

  11. EULE ,

    Thanks

    Gary H.

    I believe you are correct on pulling the loans out of the trust ,, however there are MANY large originators (SunTrust for one) that own the trust and service the loan (under the one corp name) ,, it would be hard for them to stop paying themselves if it is contractually required … It is also damn near impossible I would think for the trust to find good quality “replacements” for all the bad loans. They ate through their “reserves” of “spare” loans in the middle of 2007.

    In my case it’s particularly weird in that the trust WAS NEVER CREATED ,, WFC just pretended that it existed… how do you transfer OUT of a trust if you never transferred IN (Answer: with a bogus/invalid Assignment) .. I would think that Wilbur Ross might want to team up WITH me in an action against Wells Fargo.

  12. neidermeyer,

    I believe your assessment to be correct to Zoe’s question, but a few things are not answered and begs additional questions from me.

    1. It is my understanding that a servicer will not put up with paying the trust / lender on behalf of the borrower when delinquent for more than 3 or 4 months. Many of these loans have been delinquent for more that one year without foreclosure actions taking place. So what happens in this “extended” event of non-payment…..does the loan get re-packaged and sold again by the Mortgage arm of the bank to another trust which would mean new ownership?

    2. It is also my understanding that after 90 to 120 days of delinquency a loan is “pulled” from a trust…..is this true, if so what happens to it, where does it go?

    Gary

  13. http://www.scribd.com/doc/40455462/Chase-Opposition-to-Trustee-s-Motion-for-Sanctions-Re-Silvia-Nuer

    This is a good opposition to a trustee’s motion for sancitons against Chase. It covers LPS and foreclosure mill Steven Baum.

  14. Neidermeyer , I am in Tampa , but all Lawyers to busy
    and I think you should have two, one Realty and one
    Consumer/BK to make sure you winn.
    I will Try Ms. Arkovich in Tampa, who was in the Gardner Boots Camp.

  15. thanks mr. Garfield, i have been waiting for 4+ years to get this email, i to had a mortgage with american home mortgage/d.b.a. as american brokers conduit, each of these companies filed chapter 11 bankruptcy, and as soon as the new server (a debt collecting company) american home mortgage servicing inc took over the servicing of the note they changed our entire contract, they to took out their own insurance policy, and charged it to us, they changed the amount of the note, the payments, the escrow account, and now they have refused to answer 7 qualified written request over the past 4+ years. the county court house still has american brokers conduit listed as the lender, and also shows MER’s as the nomiee, i have purchased the ebook from mr Krieger, and i have read over half of the book already, and i took am ready. thanks lg

  16. The point is there us s break in assignment from the get go. MERS is thr smoke n mirror screen to HIDE what hey were doing when it’s foreclosure time the servicer appears to be assigned beneficiary status like Neil says. Slling yourself a beneficiary doesn’t mean infact you are. Now tell me this how can you retroactively assign Th note it was split from the deed of trust and if the note is. Lost gone destroyed or whatever how can you retroactively produce sn alllonge to a COPY of the note.

  17. Zoe ,

    Naming or changing the servicer is not an assignment, assignment means ownership ,, the servicer is responsible for collecting payments , forwarding payments to the lender and optionally the county tax assessor and the insurance companies (homeowners and PMI) .. They also create and mail the end of year statements. The servicers own nothing. In our situations with securitized notes (in the 2002+ world) many if not most PSA’s (pooling and servicing agreements) require the servicer to make the payment to the trust entity whether or not they have received payment from the borrower (you are not actually in default!). This is where the servicer is granted standing to foreclose ,, however in reality as you have no contract with the servicer the payments made on your behalf should be considered an unsecured debt.

    EULE,

    Are you in Texas? I’m in Florida and I was being jacked around so bad by AHMSI (looked like they were building a case to foreclose with all their erroneous payment data and rejecting my payments… and were not dealing with me properly when I tried the mod route.) that I was basically forced to lawyer up… I need to file QT on Wells (Option One) when I can afford it and sue for whatever damages I can name..

  18. I am on that Lawsuit too. I have a Mortgage from AHMSI
    in my Creditreport , but I never had any contact with
    AHMSI. But State Attorney will find out , what the in
    India did.

  19. How can the bank try to reverse the fraud of first, commencing foreclosure and Second creating the assignment?

  20. Can someone please tell me if becoming a servicer is considered an assignment?

  21. Why do these people DIE already?

  22. The Founding of the Federal Reserve | Murray N. Rothbard

  23. […] This post was mentioned on Twitter by Mario, kim thomas. kim thomas said: American Home Mortgage Faces Servicing Lawsuits: http://t.co/3lR0tYu […]

  24. I can personally attest to every complaint the Texas AG has against AHMSI … They are particularly good at the late payment penalty game and improperly assigning payments to create late or inadequate payments… Good luck getting anyone in India to help either ,, I have 4 straight months of documented calls (totalling over 30 hours) attempting to make alternative arrangements for payment when the new computer system of WL Ross refused to take my payments.

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