On June 7, Ohio Attorney General Mark Dann sued ten companies for alleged violations of Ohio’s recently revised Consumer Sales Practices Act (OCSPA). The Defendants include Ace Mortgage Funding, LLC; Premiere Service Mortgage; Island Financial, LLC; Sage Credit Company, LLC; Wall Street Mortgage Bankers; All Line Appraisals; Apex Mortgage Services, LLC; American Home Brokerage Corp.; Robert C. Roach, The Valley Mortgage Group; and First Ohio Banc & Lending, Inc.

    The predatory lending provisions of the OCSPA were enacted partially in response to Ohio’s high foreclosure rates, which may have been fueled in part by aggressive mortgage brokers and questionable mortgage lending practices. The Attorney General alleges that lenders and brokers encouraged real estate appraisers to over-state the value of appraised homes. The recently revised OCSPA expressly includes a prohibition against improperly influencing an appraiser. The Attorney General believes that practice has resulted in Ohio home buyers owing more than their homes are worth, consequently being unable to sell or refinance their homes and facing the prospect of foreclosure.

    Dann is seeking declaratory judgments that each act alleged in the various complaints is a violation of the OCSPA and permanent injunctions that would prevent the companies from engaging in practices prohibited by the OCSPA. The companies would also be required to pay a civil penalty of $25,000 and to reimburse the wronged borrowers.

    A representative at the Ohio Attorney General’s office commented that, although the current lawsuits are each based on a single incident, it is highly probable that further instances of predatory lending practices will be uncovered as the litigation proceeds.

    In March of 2007, Dann brought suit against New Century Financial Corporation for violations of the OCSPA, and previously stated that he intended to focus on loans involving fraud and loans that are impossible for a borrower to pay.

    The press release from Attorney General Dann’s office called these suits “the first big sweep of lawsuits targeting unscrupulous mortgage brokers and lenders since [Ohio’s] new predatory lending law took effect” on January 1, 2007. See http://opif.ag.state.oh.us/ for the press release. Thus, circumstances indicate that the Ohio Attorney General will likely bring more lawsuits against mortgage lenders who engage in predatory lending practices in violation of the OCSPA.

    • Jeff Langer and Kathleen Manley