Complaint Review: American Home Mortgage Service - Irving Texas

Wilbur Ross's American Home Mortgage Faces Servicing Lawsuits

By David McLaughlin -

Oct 28, 2010 5:49 PM ET

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Wilbur L. Ross Jr., chairman and chief executive officer of W.L. Ross & Co. LLC. Photographer: Ramin Talaie/Bloomberg

Billionaire Wilbur Ross’s American Home Mortgage Servicing Inc., facing lawsuits by attorneys general in two states, was sued by a homeowner who accused the firm of using tactics that lead to improper foreclosures.

The lawsuit, filed Oct. 25 in federal court in Dallas, seeks class-action status on behalf of homeowners with mortgages serviced by American Home going back to 2006. American Home’s “illegal, unfair and deceptive business practices victimize borrowers” across the U.S., according to the complaint.

American Home “routinely and systematically assesses unwarranted fees against consumers, resulting in premature default that often gives rise to unfair and improper foreclosure proceedings,” according to the complaint.

Banks and loan servicers are under scrutiny for their foreclosure practices following accusations they relied on faulty documentation to foreclose on people’s homes. Attorneys general in all 50 states have launched a coordinated investigation into the issue.

The complaint in Dallas, filed by Kay VanHauen of Sanger, Texas, follows lawsuits by Greg Abbott, the state’s attorney general, and Ohio Attorney General Richard Cordray. They separately sued American Home, based in Coppell, Texas, for alleged violations of consumer protection laws.

‘Without Merit’

“While a lawsuit on occasion may identify a legitimate servicing error, most of which are isolated and none of which to our knowledge indicate any systematic process flaws or patterns or unlawful behavior, we believe the majority of them are without merit,” Philippa Brown, a spokeswoman for American Home, said today in a phone interview.

Ross, 72, is chief executive officer of WL Ross & Co., a company that specializes in reorganizing distressed companies. He founded the New York-based company in 2000 after overseeing the bankruptcy practice at Rothschild Inc.

WL Ross bought American Home from its bankrupt lender parent in 2008, and later added operations and servicing contracts from H&R Block Inc., Citigroup Inc. and Taylor, Bean & Whitaker Mortgage Corp. Servicers collect payments from homeowners, negotiate loan modifications and foreclose on properties when borrowers default.

In an Oct. 23, 2008, interview with Bloomberg Radio, Ross said American Home was the second-largest servicer of subprime mortgages in the U.S. and was “eager” to continue expanding. The company has servicing operations in Irvine, California, Jacksonville, Florida, and Pune, India, according to its website.

‘Unconscionably One-Sided’

In his lawsuit, the Ohio Attorney General said American Home required borrowers to sign loan modifications, forbearance agreements and security-retention agreements that contain “illegal and unfair provisions and are unconscionably one- sided” in the company’s favor. American Home also provided “incompetent, inadequate and inefficient customer service,” lost documents and failed to respond to requests by borrowers for assistance, according to the complaint.

“The acts of some mortgage servicers have gone beyond the point of being negligent -- they have become predatory financial practices and in Ohio, they won’t be tolerated,” Cordray said in a statement on Nov. 5, when the lawsuit was filed.

Default Increase

The Texas Attorney General said in his lawsuit that American Home fails to properly credit homeowners for payments made on their mortgages; falsely claims borrowers didn’t make payments in order to justify late fees; and refuses to accept payments allegedly because a borrower is in default, thereby adding more late charges. The result, Abbott said, is to render homeowners in default on their mortgages.

“The cumulative effect of the foregoing acts and practices was to place more homes into foreclosure than there should have been,” Abbott said in the Aug. 30 lawsuit.

American Home is among 30 banks and mortgage companies that Abbott wrote to on Oct. 4, demanding they halt foreclosures in the state until they ensure that foreclosures that relied on faulty documents “will be rectified” and that future foreclosures are done with “legally correct documentation.”

American Home has been reviewing its procedures and is placing “tighter controls” on document signing and notarization, according to the attorney general’s office. The company found “a very limited number of cases” in which a person signing a document may not have done so in the presence of a notary, according to the attorney general.

Misapplied Payments

The lawsuit by VanHauen, the Texas homeowner, mirrors allegations made by the attorney general. American Home, she said, misapplied mortgage payments on two loans in September 2008 and improperly assessed fees and other charges. After notifying American Home about the problem, the company refused to correctly apply the payments. It treated the loan as being in default and initiated foreclosure proceedings, according to the complaint.

American Home also charged her for a homeowner insurance policy she didn’t need and charged her for property taxes she was paying to the county, according to the complaint. VanHauen proposed that her lawsuit cover homeowners who have similar complaints against American Home.

American Home has faced similar allegations in other lawsuits. In an April lawsuit filed in federal court in Baltimore, Michael and Ingrid Landi of Frederick, Maryland, accused American Home of falsely claiming in October 2009 that they had not made mortgage payments. American Home has asked the court to dismiss the complaint.

San Diego Suit

In a complaint filed in May in federal court in San Diego, American Home was accused of foreclosing on a home while it was discussing a loan modification with the owner, Kenneth Coplin. Coplin said in his complaint that American Home assured him it didn’t intend to foreclose or sell the property “in an effort to conceal” its intention to “mislead” him and “steal” the property.

Brown, the American Home spokeswoman, said the lawsuit was dismissed. The most recent entry on the court docket shows the case would be dismissed if Coplin failed by Oct. 25 to file certain documents related to serving the complaint. Coplin couldn’t be reached for comment.

The cases are Kay VanHauen v. American Home Mortgage Servicing Inc., 10-02146, U.S. District Court, Northern District of Texas (Dallas); State of Texas v. American Home Mortgage Servicing Inc., 2010-3307, District Court of El Paso County, Texas; State of Ohio v. American Home Mortgage Servicing Inc., 09-708888, Court of Common Pleas, Cuyahoga County, Ohio; Michael Landi v. American Home Mortgage Servicing Inc., 10-00921, U.S. District Court, District of Maryland (Baltimore); Kenneth Coplin v. American Home Mortgage Servicing Inc., 3:10-cv-01096, U.S. District Court, Southern District of California (San Diego).

To contact the reporter on this story: David McLaughlin in New York at [email protected].

To contact the editor responsible for this story: David E. Rovella at [email protected].

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Wilbur Ross's American Home Mortgage Faces Servicing Lawsuits

By David McLaughlin -

Oct 28, 2010 5:49 PM ET

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Wilbur L. Ross Jr., chairman and chief executive officer of W.L. Ross & Co. LLC. Photographer: Ramin Talaie/Bloomberg

Billionaire Wilbur Ross’s American Home Mortgage Servicing Inc., facing lawsuits by attorneys general in two states, was sued by a homeowner who accused the firm of using tactics that lead to improper foreclosures.

The lawsuit, filed Oct. 25 in federal court in Dallas, seeks class-action status on behalf of homeowners with mortgages serviced by American Home going back to 2006. American Home’s “illegal, unfair and deceptive business practices victimize borrowers” across the U.S., according to the complaint.

American Home “routinely and systematically assesses unwarranted fees against consumers, resulting in premature default that often gives rise to unfair and improper foreclosure proceedings,” according to the complaint.

Banks and loan servicers are under scrutiny for their foreclosure practices following accusations they relied on faulty documentation to foreclose on people’s homes. Attorneys general in all 50 states have launched a coordinated investigation into the issue.

The complaint in Dallas, filed by Kay VanHauen of Sanger, Texas, follows lawsuits by Greg Abbott, the state’s attorney general, and Ohio Attorney General Richard Cordray. They separately sued American Home, based in Coppell, Texas, for alleged violations of consumer protection laws.

‘Without Merit’

“While a lawsuit on occasion may identify a legitimate servicing error, most of which are isolated and none of which to our knowledge indicate any systematic process flaws or patterns or unlawful behavior, we believe the majority of them are without merit,” Philippa Brown, a spokeswoman for American Home, said today in a phone interview.

Ross, 72, is chief executive officer of WL Ross & Co., a company that specializes in reorganizing distressed companies. He founded the New York-based company in 2000 after overseeing the bankruptcy practice at Rothschild Inc.

WL Ross bought American Home from its bankrupt lender parent in 2008, and later added operations and servicing contracts from H&R Block Inc., Citigroup Inc. and Taylor, Bean & Whitaker Mortgage Corp. Servicers collect payments from homeowners, negotiate loan modifications and foreclose on properties when borrowers default.

In an Oct. 23, 2008, interview with Bloomberg Radio, Ross said American Home was the second-largest servicer of subprime mortgages in the U.S. and was “eager” to continue expanding. The company has servicing operations in Irvine, California, Jacksonville, Florida, and Pune, India, according to its website.

‘Unconscionably One-Sided’

In his lawsuit, the Ohio Attorney General said American Home required borrowers to sign loan modifications, forbearance agreements and security-retention agreements that contain “illegal and unfair provisions and are unconscionably one- sided” in the company’s favor. American Home also provided “incompetent, inadequate and inefficient customer service,” lost documents and failed to respond to requests by borrowers for assistance, according to the complaint.

“The acts of some mortgage servicers have gone beyond the point of being negligent -- they have become predatory financial practices and in Ohio, they won’t be tolerated,” Cordray said in a statement on Nov. 5, when the lawsuit was filed.

Default Increase

The Texas Attorney General said in his lawsuit that American Home fails to properly credit homeowners for payments made on their mortgages; falsely claims borrowers didn’t make payments in order to justify late fees; and refuses to accept payments allegedly because a borrower is in default, thereby adding more late charges. The result, Abbott said, is to render homeowners in default on their mortgages.

“The cumulative effect of the foregoing acts and practices was to place more homes into foreclosure than there should have been,” Abbott said in the Aug. 30 lawsuit.

American Home is among 30 banks and mortgage companies that Abbott wrote to on Oct. 4, demanding they halt foreclosures in the state until they ensure that foreclosures that relied on faulty documents “will be rectified” and that future foreclosures are done with “legally correct documentation.”

American Home has been reviewing its procedures and is placing “tighter controls” on document signing and notarization, according to the attorney general’s office. The company found “a very limited number of cases” in which a person signing a document may not have done so in the presence of a notary, according to the attorney general.

Misapplied Payments

The lawsuit by VanHauen, the Texas homeowner, mirrors allegations made by the attorney general. American Home, she said, misapplied mortgage payments on two loans in September 2008 and improperly assessed fees and other charges. After notifying American Home about the problem, the company refused to correctly apply the payments. It treated the loan as being in default and initiated foreclosure proceedings, according to the complaint.

American Home also charged her for a homeowner insurance policy she didn’t need and charged her for property taxes she was paying to the county, according to the complaint. VanHauen proposed that her lawsuit cover homeowners who have similar complaints against American Home.

American Home has faced similar allegations in other lawsuits. In an April lawsuit filed in federal court in Baltimore, Michael and Ingrid Landi of Frederick, Maryland, accused American Home of falsely claiming in October 2009 that they had not made mortgage payments. American Home has asked the court to dismiss the complaint.

San Diego Suit

In a complaint filed in May in federal court in San Diego, American Home was accused of foreclosing on a home while it was discussing a loan modification with the owner, Kenneth Coplin. Coplin said in his complaint that American Home assured him it didn’t intend to foreclose or sell the property “in an effort to conceal” its intention to “mislead” him and “steal” the property.

Brown, the American Home spokeswoman, said the lawsuit was dismissed. The most recent entry on the court docket shows the case would be dismissed if Coplin failed by Oct. 25 to file certain documents related to serving the complaint. Coplin couldn’t be reached for comment.

The cases are Kay VanHauen v. American Home Mortgage Servicing Inc., 10-02146, U.S. District Court, Northern District of Texas (Dallas); State of Texas v. American Home Mortgage Servicing Inc., 2010-3307, District Court of El Paso County, Texas; State of Ohio v. American Home Mortgage Servicing Inc., 09-708888, Court of Common Pleas, Cuyahoga County, Ohio; Michael Landi v. American Home Mortgage Servicing Inc., 10-00921, U.S. District Court, District of Maryland (Baltimore); Kenneth Coplin v. American Home Mortgage Servicing Inc., 3:10-cv-01096, U.S. District Court, Southern District of California (San Diego).

To contact the reporter on this story: David McLaughlin in New York at [email protected].

To contact the editor responsible for this story: David E. Rovella at [email protected].

I agree with Ashley and Noir on this one, where is the rip-off? And I agree that the biggest concern was at the beginning of the statement: 'While I was looking for 1 mortgage I had to settle for 2 in order to finance my house because I was self employed and no one would 'buy me' for 1 rate. My real estate agent said I could refinance after 1 year with no problem. Nothing could be further from the truth.' No matter how hard it is to admit, this one fact alone is a major red flag, and I personally would never feel comfortable entering into a such a shaky loan agreement, as would most people. I didn't purchase my first house until I had been at my job for a few years and knew that I had a steady and stable income, which is why I ended up with a 30-year fixed 4.5% loan. But if I knew that I couldn't guarantee my employment or how much my income would be monthly, I would've never purchased my home. My point being, I think that you entered into this contract far too lightly. Purchasing a home is a difficult, invasive process which is a PRIVILEDGE to some people and should be taken very seriously. If you are trying to buy a home and you are not getting offered the loans that work for you or your bank states that they are having trouble financing you, then that should tell any borrower to just have a little more patience and to buy a home later down the line when it is more financially responsible. I work for a company that retains AHMSI as a client, and I do realize that there are many problems currently at AHMSI, as with many of the major sub-prime lenders right now. But at the same time, they are still a business and as a self-employed person, you know that there is a bottom line in every business. AHMSI is not obligated to modify any customers loan for any reason, they are only obligated to follow signed contracts. The bottom line of AHMSI is affected by having to modify the two loans that you agreed to and while it is terrible that you had health problems during the time of your loan, unfortunately we all have things that happen out of our control and there is no reason that a company should have to change a contract because of these occurrences. Also, to the point of your not having a disclosure of the pre-payment penalty included in your loan, I find that very questionable. Having worked in the loan industry, especially the default industry I know that nearly all sub-prime or ARM loans have or had the typical two year (or more) pre-payment penalty attached to the loan. This is very common, and would have been very easy to clear up when you were trying to refinance with your 'real bank'. Clearly there is a portion of your previous loan showing a pre-payment penalty that you signed on, or else the legitimate bank that was trying to refinance your loan would have never said anything. That situation is kind of black and white, did you sign or not, because there is obviously something stating a pre-payment penalty somewhere, the question is whether you signed or not? And your idea of a loan modification is pretty outstanding, because you said you want them to give you a 30-year fixed 5%, coming from a sub-prime or non-prime, segmented loan? A 30-year fixed 5% is almost as good as my current mortgage, and I have spent YEARS making my credit stellar, have a degree (which I also am still paying for), and have worked extremely hard to get a job that has paid me great for the past few years. Why should a company (AHMSI) be forced to modify your loan to a loan that is reserved for customers with 700+ credit scores and steady, regular income? By having to modify your loan, especially to this degree, AHMSI would lost thousands, if not hundreds of thousands of dollars of money which has already been invested in the loan that you agreed to. This is just not financially viable for most companies and they have they have literally thousands of other customers trying to do the same thing as you sir. I realize that this is some brutal honesty, but having made many major financial mistakes in my life, I do realize the consequences that can come from major purchases or not managing my money correctly. I know that Option 1/AHMSI 3 does have to take some responsibility for even offering loans with such ridiculous terms to borrowers who weren't qualified, but I think that you also need to take some personal responsibility for entering into a loan which had such outrageous agreements to begin with. Just realize that if foreclosure is the eventual answer, it is not the end of the world and life will go on. But the blame cannot all go to AHMSI, you need to take responsibility for accepting a loan which was pretty much set up for failure.

That is what we are doing Ashley...And no...it was not in the disclosure...why do you think we have filed this notice to others. This company has done many unethical things to many people...I have come across others in the mortgage service industry and they try to help their clients work things out to the best of their ability...this one does not...their mitigation department is anything but...do you think all of these people here are asking them to bend over backwords...they are not...they are asking for fair treatment and or fair negotiations to solve problems. This company does nothing but give grief to people who already have had enough grief in their lives...you don't kick people while they are down...you don't see any where near the amount of complaints on any other mortgage company as you do this one...it would be obvious to most people that this company has some serious issues...Option One-bankupt & serious indictments, American Home Mortgage-same thing, the only portion of the company that was allowed to continue operations was the debt collection arm of the company...the rest was closed down. And yes...I trusted my real estate agent very much...thats what she is/ was supposed to be there for...I was in the Auto Sales business for a number of years & worked at a reputable dealer...when things were not solved to the satisfaction of my customers I stepped in a made sure they were...I expect others to do the same as I did...no matter what field they are in...negotiate and work something out...that means give and take on both sides...there is little to none with this company...they do not give a _ _ _ _ what so ever...just total abuse to all. What goes around comes around...they are putting up a fight and I just hand it right back to them...when they want to become a little more professional than I will do the same...and if they give us some reasonable offers to work things out I will also conduct myself accordingly and come back on this site to let others know that they made that effort...up to this point they have not...this after filling out tons of paperwork repetitively and documenting all issues and or giving the requested information to them...the organization that we hired in Virginia is/ has been met with the same treatment from them that we have received.

if there was no pre-payment penalty disclosure, why are you not suing them then? I believe you did not read your contract and it is in there. As you admitted, when you tried to refinance the new bank found it. A company can't rewrite a contract that you have signed without sending you a new contract. If they did, then you need to sue the pants off of them. It sounds as if they have a mitigation department, you just don't like the fact that they won't bend over backwards to accept whatever deal you want them to. As for not responding in the forum, I'm just responding to new claims, not in any particular forum.

Well now we have 2 people that wish to attack me and completely overlook the company and its problems...maybe you both need to re read...AS I SAID BEFORE...THERE WAS NO PRE PAYMENT PENALTY DISCLOSURE...WHAT PART OF THIS DO YOU NOT UNDERSTAND...? Strange that I see no acknowledgement on either or your postings about this wrong doing. Also I am back in NJ recovering from surgery...the only reason the home has not been forclosed on is that I am still paying a percentage of the mortgage each month and have hired an attorney to fight this company...also strange that I don't see either of you making comments about anyone else in this forum...just me The reason this complaint was made is/was the company denying there even was a mitigation department when one was clearly evidenced on their site...and then their refusal to give me the address on where to send the appropriate paperwork...the rest even though it is a poor company to deal with I can put up with...since neither one of you have any problems with this company it does not mean they don't exist...and for that matter since neither of you have had to deal with this company take your kicks on kicking others while they are down elsewhere...it is bad business when you advertise having a department that is supposed to deal with particular issues and in reality does not. There were no red flags...had perfect credit & a decent downpayment...and at the time before medical issues a decent business...I have every right to buy a house just as the both of you had...I can not help it if a costly medical issue came up out of no where...happens to many people...I have known people like you before...always self rightous and ready to blame others for their own problems until something like this happens to them and all of the sudden it is a different story...the report was filed for failure of disclousure and failure of the mitigation to act in good faith...since neither one of you are involved with this company or its problems I suggest you go elsewhere to dispense your pain on the unfortunate...for that matter why not go visit those from option 1/ A.H.M.S.I who are have been indicted and tell them what wonderful people they are since you seem to like them so much...I guess the rest of us here are all wrong.

While I am truly sorry that you are faced with the challenge you are currently undegoing, you must in some way acknowledge that you had some responsibility in the situation. In your initial report you write: "While I was looking for 1 mortgage I had to settle for 2 in order to finance my house because I was self employed and no one would 'buy me' for 1 rate. My real estate agent said I could refinance after 1 year with no problem. Nothing could be further from the truth." This in itself should have provided a "red flag." Having to "settle" in a long term commitment in which a mortgage brings does not bode well. What guarantees did your real estate agent provide for being able to "refinance after 1 year with no problem" (your own words)? Did you check into the guarantee of your real estate agent, or did you simply take his or her word at face value? Your situation sounds not unlike those that are repeated often on ROR....buyers that were so eager to get into a house that they did not truly comprehend the commitment they were making. There are serious issues with those that backed such mortgages as yours, but those mortgages would not have been financed if there had not been people like to you simply sign on the dotted line without a thought. N

I am sure at some point you got paperwork outlining the details of the loan, including the prepayment penalty, that you signed. If you did not sign it, then it would not be legally enforceable. I do have a home mortgage, I have refinanced before, i pay my mortgage on time and I read my contract fully before agreeing to anything. Guess what, I've never had any problems. I understand that a mitigation department is for mitigation. From doing some quick research on the net, it appears most companies use this as a way of setting up a payment schedule to get back on track with your current mortgage agreement. there is no legal requirement that a company renegotiate a signed and agreed to contract. I'm sorry that you have gone through some serious life issues, but this is no fault of the company you have your mortgage with. The fact that you are still in your home when you have been having trouble making payments since last summer shows the company has some willingness to work with you or they would have started foreclosure procedures already. If I have something catastophic happen to me (which I have) and my creditors refuse to work with me, then guess what. I'll suck it up and figure it out. Even if it means bankruptcy or foreclosure on my home. I don't expect companies to cut me a special deal, I signed a contract and I should live up to my end of the bargain.

Dear Ashley from Springfield Missouri...apparently you don't know very much about having to buy a home & then having to move into it...I had a business in the area of the home purchase at that time and had to move "INTO" the house asap...the prepayment penalty was not in the original paper work that you review prior to getting the mortgage. So therefore I did not "AGREE" to this before hand...Secondly when your company has a mitigation department they are (1) required to admit to the client that they have one instead of denying it...(2) they are required to give the client the address of that department instead of arguing with the client and refusing to give it to him...apparently you don't seem to know to much about customer service either...I will be sure to be around when something catostrophic happens to you health wise and various debt collectors start calling you and refuse to work with you and then I will be sure to say...tough crap...let those companies enforce it...you agreed to it...I guess all of these other people on this site are wrong about A.H.M.S.I. too...and I guess the people from Option One Mortgage and A.H.M.S.I that were subpoenaed and charged in court with fraud & kickbacks to mortgage brokers who steered business there way were wrong also...?

Dear Ashley from Springfield Missouri...apparently you don't know very much about having to buy a home & then having to move into it...I had a business in the area of the home purchase at that time and had to move "INTO" the house asap...the prepayment penalty was not in the original paper work that you review prior to getting the mortgage. So therefore I did not "AGREE" to this before hand...Secondly when your company has a mitigation department they are (1) required to admit to the client that they have one instead of denying it...(2) they are required to give the client the address of that department instead of arguing with the client and refusing to give it to him...apparently you don't seem to know to much about customer service either...I will be sure to be around when something catostrophic happens to you health wise and various debt collectors start calling you and refuse to work with you and then I will be sure to say...tough crap...let those companies enforce it...you agreed to it...I guess all of these other people on this site are wrong about A.H.M.S.I. too...and I guess the people from Option One Mortgage and A.H.M.S.I that were subpoenaed and charged in court with fraud & kickbacks to mortgage brokers who steered business there way were wrong also...?

Dear Ashley from Springfield Missouri...apparently you don't know very much about having to buy a home & then having to move into it...I had a business in the area of the home purchase at that time and had to move "INTO" the house asap...the prepayment penalty was not in the original paper work that you review prior to getting the mortgage. So therefore I did not "AGREE" to this before hand...Secondly when your company has a mitigation department they are (1) required to admit to the client that they have one instead of denying it...(2) they are required to give the client the address of that department instead of arguing with the client and refusing to give it to him...apparently you don't seem to know to much about customer service either...I will be sure to be around when something catostrophic happens to you health wise and various debt collectors start calling you and refuse to work with you and then I will be sure to say...tough crap...let those companies enforce it...you agreed to it...I guess all of these other people on this site are wrong about A.H.M.S.I. too...and I guess the people from Option One Mortgage and A.H.M.S.I that were subpoenaed and charged in court with fraud & kickbacks to mortgage brokers who steered business there way were wrong also...?

Dear Ashley from Springfield Missouri...apparently you don't know very much about having to buy a home & then having to move into it...I had a business in the area of the home purchase at that time and had to move "INTO" the house asap...the prepayment penalty was not in the original paper work that you review prior to getting the mortgage. So therefore I did not "AGREE" to this before hand...Secondly when your company has a mitigation department they are (1) required to admit to the client that they have one instead of denying it...(2) they are required to give the client the address of that department instead of arguing with the client and refusing to give it to him...apparently you don't seem to know to much about customer service either...I will be sure to be around when something catostrophic happens to you health wise and various debt collectors start calling you and refuse to work with you and then I will be sure to say...tough crap...let those companies enforce it...you agreed to it...I guess all of these other people on this site are wrong about A.H.M.S.I. too...and I guess the people from Option One Mortgage and A.H.M.S.I that were subpoenaed and charged in court with fraud & kickbacks to mortgage brokers who steered business there way were wrong also...?

Not sure where the ripoff is. You were not forced to get the two loans, you read them and saw they were outrageous you should have backed out then. You didn't. You signed the contract and agreed to them. You also agreed to the prepayment penalty. then you admit to losing work and not making your payments. Now you are behind on your payments and are angry because they won't work with you on a payment arrangement? They are not required to work with you, granted they should, but they don't have to. You have a contract, they are enforcing the contract you agreed to.