In an announcement Wednesday, Ohio Attorney General Richard Cordray said he has filed a lawsuit against New York-based Barclays Capital Real Estate, doing business as HomEq Servicing.

HomEq, a participant in the federal Home Affordable Modification Program (HAMP), has been accused of issuing unfair loan modification agreements and providing inadequate, incompetent customer service to Ohioans who were at risk of losing their homes to foreclosures. According to the lawsuit, Ohio homeowners in need of loan modifications through HomEq were forced to enter into one-sided agreements. These allegedly unfair and deceptive agreements released HomEq of all liabilities and required borrowers to pay additional fees and waive their right to defense.

In addition, HomeEq was accused of violating Ohio’s Consumer Sales Practices Act (CSPA) through incompetent and inefficient customer service. According to the lawsuit, HomEq failed to return customer calls or respond to repeated inquiries, lost borrowers’ document, and neglected to offer timely and affordable loss mitigation options to its customers.

“There has been ample time for loan servicers to strengthen their efforts and start making a significant difference in preventing home foreclosures,” Cordray said. “Unfortunately, many servicers have instead repeatedly chosen to aggravate the crisis through noncompliance and excuses. As I see it, for every excuse, hundreds of families become more vulnerable to losing their homes. In Ohio, we have zero tolerance for any more excuses.”

Servicing more than 10,000 subprime loans in Ohio, HomEq became a HAMP participant in August. In terms of loan modifications initiated, the company is one of the lowest performing servicers, according to the December Servicer Performance Report issued by the U.S. Treasury Department.

“HomEq believes this is a meritless complaint which it will defend vigorously,” the company said in response to these allegations. “HomEq is committed to quality customer service and to working with financially distressed borrowers to help them remain in their homes.”

Wednesday’s lawsuit against HomEq seeks a permanent injunction from the continuation of the company’s unfair and deceptive loan modification practices, consumer restitution, civil penalties, and damages. This lawsuit marks the third filed by Cordray against a loan servicer operating in Ohio.