Texas Attorney General Sues Mortgage Servicing Company

DALLAS - Just two weeks after a FOX 4 investigation, the Texas Attorney General is cracking down on a local mortgage servicing company.

In our investigation , FOX 4 showed how the AG's office told complaining consumers it was too busy and they should hire their own attorneys to fight American Home Mortgage Servicing, Inc. But that has suddenly changed.

Now, the Texas Attorney General has sued the Coppell-based company, accusing AHMSI of aggressive and unlawful tactics to collect mortgage payments from Texas homeowners and has filed suit.

Charles Smith is one of hundreds of Texas consumers who complained to the Texas Attorney General’s office, although the suit does not specifically name consumers. Smith says he was not behind on his property taxes and paid them separately from his mortgage. But AHMSI set up an escrow account and then jacked up his monthly mortgage payment to cover the taxes. Smith feared he could lose his home.

The Attorney General’s lawsuit claims such a practice is a violation of the Texas Debt Collection Act. It also charges the company with failing to credit consumers for payments made, using false claims that consumers did not make payments to justify the imposition of late fees and an escrow account, failing to recognize consumers already had insurance policies, and unnecessarily force-placing new policies.

Connie and Kevin Christopher say it was an insurance issue that triggered foreclosure proceedings on their Port Arthur home. The Christophers had a homeowner’s insurance policy and a letter from Farmers Insurance to prove it. But AHMSI set up an escrow account and jacked-up their mortgage payments, too.

Connie Christopher complained she had more than 30 calls from AHMSI and never spoke to the same person. The AG’s lawsuit states consumers complained of never speaking to the same person twice and the company repeatedly called consumers several times on the same day.

The suit also charges AHMSI with offering loan modifications that in many cases increased the monthly mortgage payment. The effect, according to the suit, was to place more homes in to foreclosure than there should have been.

’They need to be stopped,’ says Thomas Shores. ’They need to be penalized.’

Shores’ mother-in-law, Helen Jordan complained to the AG’s office about her taxes. Jordan had her taxes deferred, as allowed by Texas law for homeowners over 65 years old. But Jordan complained the company went ahead and paid the five year’s worth of back taxes and then demanded repayment. The company cleared up her account after FOX 4 started asking questions.

’I’m just thankful for Greg Abbot pursuing this and for Channel 4 pursuing this,’ said Shores. ’It wouldn’t have happened without Channel 4.’

The Christophers sued American Home Mortgage Servicing, Inc. to try to stop their foreclosure. Charles Smith says he believes his tax problem has now been resolved.

The Texas Attorney General’s office is seeking civil penalties of up to $20,000 per violation of the Texas Deceptive Trade Practices Act and is asking the courts to order the company to give back any money or property to consumers that was unlawfully taken from them.

CLICK HERE TO SEE THE ATTORNEY GENERAL’S PRESS RELEASE

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