U.S. Starts Criminal Probe of Lender Processing Services Inc. Foreclosure-Data Provider

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

[LPS a/k/a DOCX] produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

Editor’s Note: The executive branch is finally becoming involved. The foreclosure mills have been producing dubious and/or fraudulent, fabricated, forged documentation for 3 years or more. Some of these foreclosure mills are operating in the same office and owned by the law firms prosecuting foreclosures. Maybe sooner than later these unethical, illegal practices will stop and the people responsible will be prosecuted for criminal violations, civil fines, and administrative grievances in which their licenses will be revoked.

But in the end we still have millions of homes whose title is at least clouded, probably defective and will soon become unmarketable as title companies realize the issues presented by fraudulent foreclosures by entities other than the creditor.

Wall Street Journal

April 3, 2010

U.S. Probes Foreclosure-Data Provider

Lender Processing Services Unit Draws Inquiry Over the Steps That Led to Faulty Bank Paperwork

By AMIR EFRATI and CARRICK MOLLENKAMP

A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors.

The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature.

Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment.

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

During the housing boom, mortgages were originated by lenders, quickly sold to Wall Street firms that bundled them into debt pools and then sold to investors as securities. The loans were supposed to change hands but the documents and contracts between borrowers and lenders often weren’t altered to show changes in ownership, judges have ruled.

Related Documents

Documents processed by LPS that said an entity called “Bogus Assignee” owned the mortgage:

That has made it hard for banks, which act on behalf of mortgage-securities investors in most foreclosure cases, to prove they own the loans in some instances.

LPS has said its software is used by banks to track the majority of U.S. residential mortgages from the time they are originated until the debt is satisfied or a borrower defaults. When a borrower defaults and a bank needs to foreclose, LPS helps process paperwork the bank uses in court.

LPS was recently referenced in a bankruptcy case involving Sylvia Nuer, a Bronx, N.Y., homeowner who had filed for protection from creditors in 2008.

Diana Adams, a U.S. government lawyer who monitors bankruptcy courts, argued in a brief filed earlier this year in the Nuer case that an LPS employee signed a document that wrongly said J.P. Morgan Chase & Co. had owned Ms. Nuer’s loan.

Documents related to the loan were “patently false or misleading,” according to Ms. Adams’s court papers. J.P. Morgan Chase, which has withdrawn its request to foreclose, declined to comment.

Linda Tirelli, a lawyer for Ms. Nuer, declined to comment directly on the case.

Ms. Kersch said LPS didn’t actually create the document and that the company’s “sole connection to this case is that our technology and services were utilized by J.P. Morgan Chase and its counsel.”

While the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

Some lawyers representing homeowners have claimed that banks routinely file erroneous paperwork showing they have a right to foreclose when they don’t.

Firms that process the paperwork are either “producing so many documents per day that nobody is reviewing anything, even to make sure they have the names right, or you’ve got some massive software problem,” said O. Max Gardner, a consumer-bankruptcy attorney in Shelby N.C., who has defended clients against foreclosure actions.

The wave of foreclosures and housing crisis appears to have helped LPS. According to the annual securities filing, foreclosure-related revenue was $1.1 billion last year compared with $473 million in 2007.

LPS has acknowledged problems in its paperwork. In its annual securities filing, in which it disclosed the federal probe, the company said it had found “an error” in how Docx handled notarization of some documents. Docx also has processed documents used in courts that incorrectly claimed an entity called “Bogus Assignee” was the owner of the loan, according to documents reviewed by The Wall Street Journal.

Ms. Kersch said the “bogus” phrase was used as a placeholder. “Unfortunately, on a few occasions, the document was inadvertently recorded before the field was updated,” she said.

Write to Amir Efrati at amir.efrati@wsj.com and Carrick Mollenkamp at carrick.mollenkamp@wsj.com

16 Responses

  1. I hear this is heating up again. LPS’s stock is almost half of what it was a year ago.

  2. To Need Justice, What happed with that LSP thing with you? I just had this happen this past week. My home is not vacant or abandoned either, any I am under suspision of this company as it is based from Fla. I am in Mass. When I called the number on the sticker they acted like they did not even know who the property belonged to and would not acknowledge the “employee” I filed a complaint with my local police for tresspass and will send a copy certified mail to this company. Would like any info, Thanks.

  3. New one i saw today now attorney general from fl is also investigating per WSJ, http://online.wsj.com/article/SB10001424052748704302304575214523297904834.html?mod=WSJ_business_IndustryNews_DLW

  4. I saw a result posted on the http://www.frauddigest.com/news.php news update that the DOCX office in GA is closing because of the case. I sure wish there were references to this aside from the one site.

  5. Here is how LPS is working with the local government in Florida, even though they do not have any law enforcement affiliation with the state….. offering course credits to Code Enforcement, taxpayer funded individuals….. When did LPS become an educational institution…and under what state charter are they authorized to provide state mandated compliance credits…. and what credentials and or state license do LPS “code enforcement educators” have…. hummmm

    http://www.lpsvcs.com/NewsRoom/Pages/20100122.aspx

  6. Gotta just LOVE Facebook….

    Would anyone like to become “friends” with any of the following???

    Let’s all send them a “friend request” shall we??? Let’s just see how “friendly” they are after they have screwed MILLIONS of people…

    Brittany Snow…
    http://www.facebook.com/#!/profile.php?id=71102836&ref=ts

    Tywanna Thomas…
    http://www.facebook.com/#!/profile.php?id=601578569

    Korrell Harp…
    http://www.facebook.com/#!/profile.php?id=100000901184064

    Ron Meharg…
    http://www.facebook.com/#!/profile.php?id=100000549071096&ref=ts

    AND…

    These Fraudsters have even started up a Group for “DOCX” which is “closed” to the public meaning you have to request to “join the club”…
    http://www.facebook.com/#!/group.php?gid=284401268256&ref=mf

    Interestingly enough it says this on the page of DOCX…

    “It’s been real, but I guess good things sometimes come to an end. So lets all join the group and stay friends. :)”

    I tried and they didn’t like me…wonder why…was it something I said???

  7. This link should prove interesting to anyone dealing with an affiliate of the Shapiro network of attorneys and their association with LPS….

    http://www.dsnews.com/articles/logs-member-firms-recognized-by-lps-2009-07-22

  8. Freddie Mac, Wells Fargo, and foreclosure lawyers are engaged in foreclosure frauds, extortion, as well as fraud upon the IRS. (*hyperlink below.) *This is what happened to me; however fraudulent bankruptcy court “lift stay” motions and foreclosure fraud filed by Louisiana lawyers are the norm!

    Foreclosure mill lawyer filed a foreclosure case in the name of an entity which did not own my mortgage note. I filed court proceedings to challenge my home being taken by use of the identity of a defunct mortgage lender. In the process of that challenge, an AFFIDAVIT was entered into federal court records sworn to by the “successor” mortgage company (yet, the bogus foreclosure culminated). During litigations, most egregious and appalling things happened to me from courtroom judges and teams of Freddie Mac and Wells Fargo lawyers.

    The salient things about New Orleans false foreclosures, is that false bankruptcy (“Lift Stay) and foreclosure pleading are deliberately false; Freddie Mac and Wells Fargo knowingly collude with foreclosure mills; neighborhood blights due to repeated ‘flipping;’ and filings of false IRS form 1099-A is common. Also, not only is the outcome illegal loss of one’s home, black listing from employment, humiliating invasions of privacy, persecutions, and more become afflicted on people who refuse to relent and cooperate with unlawful repossessions of their homes. There are many other documents, transcript excerpts, and pleadings posted on my website. See the entire facts @ http://www.lawgrace.org/2010/04/07/comments-foreclosure-on-louisiana-judge-reginald-badeaux-home-us-attorney-jim-letten-freddie-mac-wells-fargo-frauds-collusion-etc/.

    Here is a direct quote overview found at the above-referred link:

    “. . . July 20, 2004 Affidavit. It was filed by GE Mortgage Services, LLC, the “successor in interest” to GE Capital Mortgage Services, Inc. This Affidavit proves Freddie Mac COULD NOT possibly have [lawfully] bought the Lurline Street property in July 2005 from defunct GE Capital Mortgage Services, Inc; therefore, the Freddie Mac eviction of the occupants on August 25, 2005, was not lawful. The Affidavit also proves debt collector Hershel Adcock’s “SIMULATED” May 19, 2005 foreclosure auction of Lurline Street, accomplished via use of non-existent GE Capital’s identity, was absolute fraud! The affidavit effectively proves that: (1) Had a lawful foreclosure been in the first place filed, the successful bidder at Adcock’s auction could not have been defunct GE Capital, but the property deed that Adcock later recorded would have been in the name of GE Mortgage Services, LLC –if the foreclosure was in the first lawful, which it could NEVER be; and (2) it demonstrates that –because in Louisiana, foreclosure cases lists the collector’s name as the plaintiff, Adcock was able to himself bid on the property since no one was present except him, and then flip it to Freddie Mac. (3) The Affidavit also exposes the glaring LACK OF PURSUIT or CLAIMS for any legal rights successor, GE Mortgage Services, LLC might have had –in light of its attested Affidavit that it became the succeeding owner of the note for the Lurline property. (However, THERE DOES NOT EXIST AN ENFORCEABLE PROMISSORY NOTE for 4968 Lurline Street, due to the fact that Wells Fargo deliberately prepared a bogus, false loan modification document in the name of a non-owner of that Lurline mortgage loan!) *Federal law does require joinder of indispensable parties, such a “successor” to lawsuits. (4) Even further, the affidavit evidences impossible and fraudulent it was for Wells Fargo to file with the IRS a form 1099-A on which Wells Fargo falsely informed the IRS that Wells Fargo “acquired” the Lurline Street property on May 19, 2005. (5) Finally, if Wells Fargo was not intentionally committing Internal Revenue fraud and complicit in Adcock’s practice of real estate frauds, why did Adcock have the property deed recorded in the name of non-existent GE Capital Mortgage Services –and why was Freddie Mac’s purported July 2005 purchase of the Lurline property (and which Freddie Mac evicted the Lurline occupants) not purchased from Wells Fargo? The New Orleans Times Picayune newspaper real estate transfers section, reported that Freddie Mac paid an amount of over $86,000.00 to (defunct), GE Capital Mortgage Services, Inc., for the purchase of the Lurline Street property! HOWEVER, THE FACTS POINT TO ADCOCK AS BEING THE MOST LIKELY RECIPIENT OF THAT MONEY, while Wells Fargo got its portion of money from filing Wells Fargo’s false form 1099-A, so as to receive tax write-offs and credits from the IRS.

    ANY REPRESENTATION to Wall Street Investors by FREDDIE MAC and by WELLS FARGO that $$$$$$$$$ billion dollar losses are due to people defaulting on their mortgages should be weighed against the fact that in Louisiana, Freddie Mac and Wells Fargo needlessly pays to DEBT COLLECTION firms outrageous litigation costs for corporate lawyers to outmaneuver –and even persecute people who file court proceedings in opposition to contrary-to-law, as well as fraudulent foreclosures.

  9. So what was all that brew haha re indymac and the FBI investigation I think July 08

  10. LPS tried an illegal eviction on me by posting a “vacant or abandoned” notice on my occupied home of 25 years. Even after I called LPS to notify them the home was occupied, with a home owner, there soon was a company with a work order from the Mortgage holder trying to break in my home and change the locks.

  11. smallz- you hit the nail on the head. The article quotes a spokesperson as saying “all the processes under review have been terminated”. My thought was that that can’t happen, as it is the co.’s sole reason for existence.

  12. OK NEIL THIS IS IMPORTANT I’VE NOTICED THAT A LOT OF DOCUMENTS IN THE FORECLOSURE PROCESS ALL GET NOTORIZED IN DAKOTA MINNESOTA FOR FORECLOSURES ALL OVER THE COUNTRY, BUT THEY ARE NEVER RECORDED. IN MY CASE IT WAS SUBSTITUTION OF TRUSTEE THE FIRST TIME

  13. It is too bad the original article from the WSJ didn’t talk about all the forgeries coming out of this company. If you take ten random assignments, you can end up with ten variations of each signature on the documents.

    Just take a look at the Palm Beach Assignment and compare it to the Wayne County Assignment that was included in the original article from the WSJ.

    Linda Green’s signature does not match. What a Surprise…

    This is just the tip of the iceberg.

    4closureFraud

  14. If all of the fraud where removed, there would be nothing left.

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