Ohio settles court case against New Century lender
Ohio has settled its lawsuit against bankrupt subprime lender New Century Financial Corp., more than a year after going to court to block the company from foreclosing on homes, evicting homeowners or making further loans.
The agreement Ohio negotiated with the company permanently extends those protections to consumers, state Attorney General Nancy H. Rogers said in announcing the deal Wednesday, Nov. 26. The company also promised not to violate Ohio’s consumer protection and mortgage laws, Rogers said.
The settlement resolves allegations of loan origination misconduct that the state filed in 2007 against the Irvine, Calif.-based company and two of its subsidiaries, she said.
The state filed suit last year in Cuyahoga County Common Pleas Court in Cleveland, the area where New Century and its subsidiaries, New Century Mortgage Corp. and Home123 Corp., did most of their business in Ohio. Dayton-area homeowners also reported problems in their mortgage relationships with the companies.
Ohio accused New Century, which specialized in making loans to borrowers with weak credit histories, of making false statements and accepting consumer money to process loans that the company knew it could not afford to fund.
Through the court case, the Ohio Attorney General’s office reviewed loans for evidence of predatory lending. A total of 106 borrowers were found to be eligible for loan modification discussions through the attorney general with the current holder of their loans, Rogers said.
Of those cases, 33 loans have been modified, 41 are being negotiated, 29 were released due to no consumer contact, two were handled by Legal Aid attorneys, and one was refinanced by the borrower. Of the 33 loan modifications, more than $250,000 in principal has been forgiven, more than $90,000 in fees and costs have been waived, all adjustable rate loans have been converted to fixed rate loans, and in many cases the mortgage interest rate was reduced, Rogers said.
Consumers who believe they have been a victim of predatory lending may file complaints with the state attorney general’s office at www.ag4ohio.gov or by calling 1-877-244-6446.
New Century and its subsidiaries are being liquidated under U.S. Bankruptcy Court supervision. Ohio’s claims for $250,000 in fines from New Century and Home123 Corp. have been granted, Rogers said.
