Can You Sue Your Mortgage Servicer in Ohio?

February 26, 2013

Can You Sue Your Mortgage Servicer in Ohio?

Supreme Court of Ohio will hear oral argument on February 26, 2013 on whether stand-alone mortgage servicers, relatively new entities charged with effecting and implementing Ohio home loans, are exempt from the state’s primary consumer protection scheme.  In the context of securitized loans, mortgage servicers are tasked with handling all customer-relations issues for the life of the loan.  The mortgage servicer is the only point of contact for a consumer involved in a mortgage transaction.  Servicers  are  attempting  to portray  their role as merely collecting payments and forwarding them to the owner of the lender, but the servicer’s involvement is far more extensive.  Servicers are responsible for applying payments, handling disputes and responding to customer inquiries.  In each of these areas, mortgage servicers exercise considerable discretion.

When borrowers fall behind, the power of the servicer increases significantly.  It is often the servicer that decides which borrowers receive loan modifications or forbearance agreements and which borrowers end up in foreclosure.  These decisions are made long after the underlying purchase and financing of a home.  When servicers display a pattern of incompetence, inefficiency and delay, Ohio homeowners are often left without a remedy.

Ohio’s Consumer Sales Practices Act (“CSPA” or “the Act”), codified at R.C. § 1345.01 et seq., broadly prohibits “suppliers” to a “consumer transaction” from committing unfair, deceptive and unconscionable practices.  This certification process effectively asks the Court to decide whether these prohibitions allow Ohio homeowners, and indeed the state itself, to challenge unscrupulous practices when they concern a consumer’s most valuable possession: their home.  Murray & Murray lawyers John T. Murray and Leslie Murray will be arguing on behalf of the homeowner. 

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