LPS’ Legal Problems Worse Than They Appear, Reuters Says

Posted by Orb Staff on December 07, 2010 No Comments
Categories : Mortgage Servicing

Lender Processing Services' (LPS) Default Solutions division ‘produced documents of dubious authenticity’ in larger volumes and over a longer time frame than the company previously disclosed, Reuters reports in an extensive article published Monday.

The bundled-services giant has been at the center of numerous investigations in the past year. Last month, U.S. Comptroller of the Currency John C. Walsh testified before Congress that his agency is taking part in an investigation being led by the Federal Reserve. That investigation has included on-site visits to LPS' offices.

Separately, the office of Florida Attorney General Bill McCollum is probing the company based on findings that former LPS DocX subsidiary prepared mortgage documents, such as assignments, that included forged signatures. The company has previously admitted that a DocX employee signed another employee's name on mortgage documents.

"LPS was unaware of this practice," the company said in October, adding that it took remedial actions to correct affected assignments. According to the company at the time, the number of affected assignments was limited to documents that were prepared for two mid-tier lenders/servicers between 2008 and 2009. LPS has also admitted that assignments containing placeholder terms, such as ‘bogus assignee’ and ‘bad bene,’ have mistakenly been submitted to courts.

Reuters, citing public records and interviews with unnamed sources, says that LPS never truly exited the document-execution space.

‘[R]ather than halt such practices after the federal investigation got under way, the company shifted the signing to firms with which it has close business ties,’ the report says, explaining that LPS had set up a so-called robo-signing unit at the office of client American Home Mortgage Servicing.

The Reuters article also suggests that LPS, which is being sued in Mississippi over allegations of splitting legal fees with attorneys who handle default work, charges fees to law firms in exchange for assignments of work.

To read the article in its entirety, click here.

SOURCES: Reuters, LPS

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