Texas Attorney General Greg Abbott says American Home Mortgage Servicing Inc. is using illegal debt collection practices and misleading struggling homeowners, resulting in foreclosure for some borrowers.

Abbott brought formal charges against the company on Monday. According to a statement from the attorney general’s office, state investigators allege that American Home’s collections agents used “aggressive and unlawful tactics” to collect payments from Texas homeowners who had difficulty meeting their mortgage obligations, and then failed to credit homeowners who properly submitted their payments on time.

Investigators allege that in other cases, the servicer’s agents falsely claimed that homeowners did not make payments so they could justify late fees or escrow accounts, and then failed to properly credit homeowners even after withdrawing funds directly from borrowers’ checking accounts.

“Because of the defendant’s unlawful conduct, homeowners defaulted on their loans, leading to foreclosure proceedings,” according to the attorney general’s office.

Abbott also says that although American Home Mortgage claims to have a “Home Retention Team” to assist distressed homeowners, many customers found that the company could not qualify borrowers for assistance to halt the foreclosure process.

The attorney general says some homeowners who actually obtained loan modifications found that their monthly payments increased rather than decreased, which worsened their problem with foreclosure. Industry studies show, however, that this is not an uncommon outcome among more servicers than just American Home Mortgage.

The attorney general is charging American Home Mortgage with multiple violations of the Texas Debt Collection Act and the Texas Deceptive Trade Practices Act (DTPA). The state is seeking civil penalties of up to $20,000 per violation.

American Home Mortgage did not respond to requests for comment regarding Abbott’s allegations and the pending lawsuit.

American Home Mortgage Servicing is headquartered in Coppell, Texas, and also has offices in Irvine, California, and Jacksonville, Florida.

The company is considered to be the nation’s largest independent subprime mortgage servicer, and is owned and funded by the private equity firm WL Ross & Co., named for its founder and chairman, investment sage Wilbur Ross.