UPDATE 1-American Home, Ohio AG sue each other over mortgages

(Recasts, adds Ohio AG suit, AG and company comment)

By Al Yoon

NEW YORK, Nov 5 (Reuters) - American Home Mortgage Servicing and Ohio's Attorney General on Thursday filed lawsuits against one other marking the latest battle between a U.S. state and firms charged with easing payments for troubled home owners.

American Home, owned by billionaire investor Wilbur Ross, said its lawsuit disputes the state's allegations of unfair practices, which were affirmed later as Attorney General Richard Cordray announced he had sued the Coppell, Texas-based mortgage servicing company.

It is the second offensive by Cordray against mortgage servicing companies that are on the front lines of state and federal efforts to stop foreclosures plaguing the economy.

Among complaints, Cordray said American Home forced consumers to pay excessive fees and waive rights in order to get help, and that contracts to ease terms on loans were "unconscionably one-sided" in favor of the company.

Cordray in July sued Carrington Mortgage Services of Santa Ana, California, for allegedly breaching an agreement to make good faith mortgage modifications.

Carrington and American Home Mortgage are participating servicing companies in President Barack Obama's Home Affordable Modification Program, which aims to ease payments for millions of financially troubled homeowners.

American Home said it was dismayed last week by a letter from Cordray threatening a lawsuit. It has received positive feedback on foreclosure prevention efforts in the state from Ohio state and non-profit agencies, it said in a statement.

"Rather than wait to be named as a defendant in a suit that AHMSI considers to be rash and without merit, we elected to petition an Ohio state court for a declaration that AHMSI's servicing practices are fully compliant with Ohio law," the company said in the statement.

Ross, who bought the servicing business of American Home Mortgage after the mortgage provider's 2007 bankruptcy, was not available for comment but a spokesman said neither Ross or his WL Ross & Co. is involved in the Ohio suit.