Texas Attorney General Greg Abbott on Tuesday charged Coppell, Texas-based American Home Mortgage Servicing Inc. (AHMSI) with using illegal debt collection tactics and improperly misleading struggling homeowners, according to a statement released by his office. AHMSI is the nation’s largest independent subprime servicer, and is owned by private equity firm WL Ross & Co. Famed investor Wilbur Ross, chairman of the private equity fund, has been busy amassing investments throughout the financial crisis; most recently, the company launched a distressed investment vehicle, WLR Recovery Fund V, according to a filing with the Securities and Exchange Commission last week. Texas state investigators allege that AHMSI collections agents have used aggressive and unlawful tactics to collect payments from Texas homeowners who had difficulty meeting their payment obligations. The company also allegedly failed to credit homeowners who properly submitted their payments on time, Abbott’s office said. A number of state attorneys general have recently announced investigations into loan servicers and/or law firms that provide foreclosure services, including Florida AG Bill McCollum, who last week said he had launched three new investigations into allegations of unfair and deceptive actions by Florida law firms handling foreclosure cases. According to the AHMSI complaint, filed in the District Court of El Paso County, Texas, Abbott’s office also makes some interesting claims that have not been seen in similar cases elsewhere in the nation. Sources suggest to HousingWire that the AHSMI case in Texas might be a litmus test for the traditional bulk servicing model. Arguing that “consumers complain of never speaking to the same representative twice, in spite of American Home’s claim that it gets to know consumers through personal attention,” Abbott’s office argues that AHMSI’s entire approach to servicing mortgage loans represents a violation of the Texas Deceptive Trade Practices – Consumer Protection Act (DTPA). Most large servicers operate call centers that make it difficult, if not impossible, to consistently speak with the same person twice. “It’s been standard practice in loan servicing since about day one,” said one source at a servicing company other than AHMSI, who asked not to be identified. But numerous specialty servicers have begun operations in recent years, focusing on managing loans for investors acquiring distressed mortgages. These servicers often utilize a “high-touch” servicing model, in which one representative is assigned to a loan for the life of the loan, and consumers can reach the same person each time they call. Such personalized service comes at an increased cost, sources say. “Big-box servicers like AHMSI could never afford personal service. The traditional servicing strip they get paid essentially precludes it,” said the same source. “Private investors acquiring distressed notes at a discount can afford to pay the higher rates to ensure personal service, and a return on their investment.” Abbott’s office said it is seeking civil penalties of up to $20,000 per alleged violation of the DTPA. Paul Jackson is the publisher of HousingWire.com and HousingWire Magazine. Follow him on Twitter: @pjackson