Lender Processing Services: The Purveyors of Fraudulent Documents & It’s Looking Like it was Worse Than at First Suspected…

06 Dec

Housing Wire gets it wrong: Paul Jackson makes noise in Yves Smith’s direction about LPS and it turns out – whoops – she was right (what did we expect? Yes – that she was right) and nope, Paul, you missed it – what you wanted was a smooth sail through the ongoing foreclosure BS but you lose today – sorry.  Yves 1 Paul 0.

Lender Processing Services Produced More Bogus Foreclosure Documents Than It ‘Fessed To

from naked capitalism by Yves Smith

Readers may recall that this site broke the story of litigation against Lender Processing Services, the biggest player in foreclosure management on behalf of mortgage servicers. These cases, launched earlier in the fall, accused the company of taking impermissible legal fees. These class action lawsuits were joined by the US bankruptcy trustee for the Northern District of Mississippi, both for herself and on behalf of all US bankruptcy fees, which meant she felt the issues set forth in the case had merit and were serious. In November, an additional class action case was filed against LPS, this time securities litigation, charging the company with making false and misleading statements to investors from July 29, 2009 to October 4, 2010, including “deceptive and improper document execution and preparation related to foreclosure proceedings.”

Subsequently, as our Richard Smith detailed earlier today, Housing Wire’s Paul Jackson attacked critics of LPS, including this blogger, of going off half baked in accusing the company of engaging in document fabrication. A Reuters investigation published today supports the critics’s case, revealing that document creation was far more extensive that the company has suggested.

From Reuters (hat tip April Charney):

Public records reveal that the company’s LPS Default Solutions unit produced documents of dubious authenticity in far larger quantities than it has disclosed, and over a much longer timespan.

Questionable signing and notarization practices weren’t limited to its subsidiary, called DocX, but occurred in at least one of LPS’s own offices, mortgage assignments filed in county recorders’ offices show. And rather than halt such practices after the federal investigation got underway, the company shifted the signing to firms with which it has close business ties. LPS provided personnel to work in the new signing operations, according to information from an LPS spokeswoman and court records including an October 21 ruling by a judge in Brooklyn, New York. Records in county recorders’ offices, and in the judge’s opinion, show that “robosigning” and preparation of apparently false documents went on at these sites on a large scale…

The criminal investigation in Jacksonville by federal prosecutors and the Federal Bureau of Investigation is intensifying. The same goes for a separate inquiry by the Florida attorney general’s office. Individuals with direct knowledge of the federal inquiry said that prosecutors have impaneled a grand jury, begun calling witnesses and subpoenaed records from LPS…

The U.S. Comptroller of the Currency’s office, which is responsible for supervising national banks, also announced in November that it had teamed up with the Federal Reserve to conduct an on-site examination of LPS…

Meanwhile, the threats from four class action lawsuits filed in federal courts appear to be greater than the company has indicated, especially one filed in Mississippi. In a highly unusual move, a unit of the U.S. Justice Department has joined that suit as a plaintiff. The lawsuit alleges that LPS extracted many millions of dollars in kickbacks from law firms through an illegal fee-sharing arrangement, in exchange for doling out lucrative foreclosure work to them.

Note the Reuters story confirms, with almost all of the details reported here, the practices we discussed in a post more than two months ago: how LPS pushed the foreclosure mills in its network to foreclose on a very strict timetable, by threatening to terminate the large flow of foreclosure litigation it directed to them if they did not perform as specified.

The story also indicates that DocX, the LPS subsidiary that not only engaged in robo signing (one perp is the now notorious Linda Greene) and filing of other questionable documents continued to operate far longer than LPS had earlier claimed (LPS maintains that the bad practices had ceased, but given its continued strained relationship with the truth, I’m not certain I’d take these denials at face value).

The article suggests that the some of questionable activities extended beyond DocX, which raises the possibility that, just as robo signing was moved into network foreclosure mill firms, other improper practices may simply have been shifted elsewhere in LPS or to its law firm arms and legs:

Hundreds of public records examined by Reuters show that production of suspect mortgage assignments was not limited to DocX.

The records indicate that employees in one of LPS’s own offices, in Mendota Heights, Minnesota, signed and notarized large numbers of documents which for multiple reasons appear invalid. Records filed with county recorders’ offices show that the Minnesota office continued to turn out these documents at least through the end of January 2010.

Dozens of assignments were signed by LPS Minnesota office employees who listed themselves as corporate officers of banks and other loan servicers, a sampling of public records from counties in five states shows. As at DocX, the assignments were signed years after the mortgages should have been transferred to the investment trusts…

Equally difficult to explain are mortgage assignments signed by LPS Minnesota employees purporting to be officers of lenders that no longer existed. For example, in January 2010, two Minnesota employees jointly signed one as officers of Encore Credit Corp., defunct since 2008.

It’s good to see the mainstream media start to take charges against foreclosure miscreants seriously, even if against a solo, if important actor. We’ll know a see change has taken place when we see similar detailed reporting on the “improprieties” of a TBTF bank.


Tags: , , , , , ,

Leave a Reply

You must be logged in to post a comment.