Ohio Attorney General Richard Cordray's lawsuit against Barclays Capital Real Estate, doing business as HomEq Servicing, moved forward with a court decision last week. Montgomery County Common Pleas Judge Timothy N. O'Connell overruled the defendant's motion to dismiss, clearing the way for Cordray's case to continue.
Cordray sued the company in December 2009 for multiple violations of Ohio's Consumer Sales Practices Act, alleting that HomEq issued unfair loan modification agreements and provided ‘inadequate and incompetent’ customer service to Ohio borrowers at risk of foreclosure.
Last week's ruling was the first state court decision to hold that mortgage servicers are accountable under the CSPA, serving to create a precedent in this first-of-its-kind legal strategy.
"This ruling takes us one step closer in our overall strategy to hold loan servicers accountable for unfair loan modifications in foreclosure cases," said Cordray. "For too long, servicers have stood idly by, talking the talk but failing to provide any real solutions to the foreclosure crisis.’
Barclays announced in May it was selling the HomEq platform to Ocwen Financial Corp. According to a Securities and Exchange Commission filing dated Sept. 8, the transaction closed earlier this month.