INDICTED! LPS Robosigning is Forgery and False Declaration in Missouri


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136 Count Indictment

EDITOR’S COMMENT: At least one Attorney General has seen the light, bringing in an indictment for forgery against DOCx, LPS, and individuals in management, citing the simple statement from an $11 per hour employee that the scope of the employee’s duties was to sign other people’s names to documents. The hour for collapse of “plausible deniability”might be drawing near. But one must question why 49 other State Attorney Generals and our very own Eric Holder U.S. Attorney general have not done the same thing, and what took them so long?

The central questions that are presented at this time include:

  1. When will other companies and individuals be indicted or will the appearance be maintained that this pattern of forgery and false declaration was limited to DOCX?
  2. Why was it necessary to create fabricate, forged documents with false declarations? Either the mortgages that were originated were valid, as the industry claims, or they were not, which is what I claim. (If the original documents were valid, no forgeries or false declarations would be required). Note that I am directing attention to the written documents including the security instrument — and not the obligation. The question is whether the written note and mortgage contained declarations that were accurate reflections of the actual monetary transaction or if the obligation was left naked in the wind, without documentation.
  3. Is the obligation between the homeowner borrower and the investor lender subject to a written agreement? If so, which one? Is it the package of documents given to the investor which contained multiple obligors or the package of documents given to the borrower which contained a false declaration of the identity of the lender and failed to include the conditions of the prospectus and pooling and servicing agreement? Or is it both?
  4. Does the fabrication and forgery of documents containing false declarations cover up other criminal activity — like theft, criminal fraud, and other violations of lending laws and securities laws?
  5. What happens to the foreclosures that were rubber stamped across the country? If based upon false, fabricated and forged documentation, how will the obvious title and notice problems be cured for future transactions relating to those properties?
  6. What happens to the deeds issued in foreclosures based upon “credit bids” from entities who were not creditors and who based their claims upon false declarations contained in fabricated, forged documentation?
  7. What happens to the individuals or orchestrated the whole mess from Wall Street offices where they deny “actual knowledge” of the wrong-doing?
  8. What is proper remedy for those who were illegally foreclosed? Under Property Law it could be return of the house. Under Contract Law it would be monetary damages, and if so, how much is enough to compensate such people? Under tort law, it could be both return of the house (constructive or resulting trust) plus monetary damages, plus punitive, treble, or exemplary damages.
  9. How much of the ill-gotten gains will the multiple fake players in the false securitization claims will they be permitted to keep and why should they keep any?
  10. Will the inquiry and subsequent indictments be broadened to include title companies, escrow agents, realtors, appraisers, mortgage brokers, and mortgage originators?
  11. Can anyone rely upon a warranty of clear title in a deed of property that was acquired through illegal means where they and the world are put on notice that there is a cloud on the title chain?


“Linda Greene” has become a household word to those on the foreclosure fraud beat. And it turns out, for once, that the work of diligent investigators such as the foreclosure attorneys around Max Gardner, and investigators like Lynn Szymoniak and Lisa Epstein led to press coverage which in turn spurred prosecutors to act.

What is striking about the indictment by a Missouri grand jury is that the Missouri AG Chris Koster has decided to challenge the banks’ party line that robosigning and related abuses were mere “paperwork problems.” He’s called robosiging what it is: forgery. The 136 count indictment is for forgeries and false declarations, and the targets are LPS subsidiary and its founder and past president, Lorraine Brown. From a press release by Koster:

Today’s indictment reflects our firm conviction that when you sign your name to a legal document, it matters,” Koster said. “Mass-producing fraudulent signatures on millions of real estate documents across America constitutes forgery. When you file those documents in our state, you are committing a crime under Missouri law.

The forgery and false declaration counts each allege that the person whose name appears on 68 notarized deeds of release on behalf of the lender is not the person who actually signed the paperwork. The documents were then submitted to the Boone County Recorder of Deeds as though they were genuine…

DOCX’s role in the robo-signing process came to national attention when 60 Minutes reported that Linda Green, an employee of DOCX, purportedly signed thousands of mortgage-related documents on behalf of several different banks and in multiple handwritings. The 68 documents on which the indictments are based were purportedly signed by Linda Green, but were in fact allegedly signed by someone else.

Forgery is a Class C felony and False Declaration is a Class B misdemeanor. If convicted on the most serious count, Brown could face up to seven years in prison for each count. DOCX could be fined up to $10,000 for each forgery conviction and $2,000 for each false declaration conviction.

The open question is whether Koster intends to stop here or is using the mob prosecution strategy that Catherine Cortez Masto seems to be employing, that of going after LPS, which was the major outsourcing platform for servicers, and seeing where that trail leads.

Additional comments from Gretchen Morgenson of the New York Times:

One of the largest companies that provided home foreclosure services to lenders across the nation, DocX, has been indicted on forgery charges by a Missouri grand jury — one of the few criminal actions to follow reports of widespread improprieties against homeowners…

A grand jury in Boone County, Mo., handed up an indictment Friday accusing DocX of 136 counts of forgery in the preparation of documents used to evict financially strained borrowers from their homes. Lorraine O. Brown, the company’s founder and former president, was indicted on the same charges.

Employees of DocX, a unit of Lender Processing Services of Jacksonville, Fla., executed and notarized millions of mortgage documents for big banks and loan servicers over the years. Lender Processing closed the company in April 2010, after evidence emerged of apparent forgeries in these documents, a practice now called robo-signing.

DocX was a particularly bad actor; we’ve discussed in earlier posts how it had a price sheet for various services, including fabricating documents like mortgage note out of whole cloth. I’m surprised it has taken this long for someone to go after them. While this is clearly good news for borrowers and bad news for LPS, I doubt that anyone at the banks will feel threatened by this action. Unless this action leads to further prosecutions, it only scrapes the surface of bad conduct in the mortgage arena.


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    Fact Sheet on HUD’s Final RESPA Rule

    For the first time ever, HUD will require mortgage lenders and brokers to provide borrowers with an easy-to-read standard Good Faith Estimate (GFE) that will clearly answer the key questions they have when applying for a mortgage including:

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    Is the interest rate fixed or can it change?
    Is there a pre-payment penalty should the borrower choose to refinance at a later date?
    Is there a balloon payment?
    What are total closing costs?

    HUD estimates that by improving upfront disclosures on the GFE, and limiting the amount estimated charges can change, consumers will save nearly $700 in total closing costs.

    Based on substantial public comment, HUD withdrew a proposed requirement that closing agents read and provide a ‘closing script.’ Instead, to borrowers in favor of a new page on the HUD-1 Settlement Statement that allows consumers to easily compare their final closing costs and loan terms with those listed on the GFE.

    HUD’s new Good Faith Estimate has been reduced from four to three pages, including an instructional page to help borrowers better understand their loan offer. In addition, the GFE will consolidate closing costs into major categories to prevent junk fees and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. HUD will specify the closing costs that can and cannot change at settlement. If a fee changes, HUD will limit the amount it can change.

    To help borrowers compare their Good Faith Estimate with their HUD-1 Settlement Statement, each designated line on the final HUD-1 will now include a reference to the relevant line from the GFE. Borrowers will now be able to easily compare their estimated and actual costs in the same manner many commenters suggested.

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    Loan originators will be required to provide borrowers their Good Faith Estimate three days after the loan originator’s receipt of all necessary information. To facilitate shopping, loan originators could not require verification of GFE information (tax returns etc.) until after the applicant makes the decision to proceed.

    HUD will allow lenders and settlement service providers to correct potential violations of RESPA’s new disclosure and tolerance requirements. Lenders and settlement service providers will now have 30 days from the date of closing to correct errors or violations and repay consumers any overcharges.

    The new, standardized GFE and revised HUD-1 will not be required until January 1, 2010.

    K&L Gates Webinar: Finally a Final RESPA Rule
    Finally a Final RESPA Rule
    For those who were unable to join the discussion, below is a link to the event recording and supporting materials.

    Event URL:
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    Supporting documents:
    Finally a Final RESPA Rule Presentation Slides
    K&L Gates RESPA client alert

    Phillip L. Schulman, Partner, Washington, DC
    Holly Spencer Bunting, Associate, Washington, DC

    RESPA Reform Resource Center
    On March 14, 2008 HUD released its new RESPA proposal. The proposed rule would create a standard GFE, apply cost tolerances, and require settlement agents to draft, read and provide a “closing script” to consumers. ALTA® is seeking your reaction to the rule and comments as we develop our response to the rule.

    Letters by ALTA® and Other Interested Parties
    August 7, Congressional Letter to HUD
    Submitted August 7, 2008 [10 Mb PDF]
    Click here to see a list of the Representatives who signed the letter.

    Click here to see a list of the Representatives who did not the letter.

    HUD Responds to Dear Colleague Letter

    ALTA® Comments on RESPA by Kurt Pfotenhauer
    Submitted May 13, 2008 [PDF] Congressman Donald Manzullo (R-IL) Comment letter
    Submitted June 10, 2008 [PDF]
    HUD Opposition Letter by Jeffrey Condie
    Submitted May 5, 2008 [PDF] SBA Office of Advocacy Comments on Proposed RESPA Rule
    Submitted June 11, 2008 [PDF]
    Letter to Acting Secretary Bernardi by P.A. Cooke
    Submitted May 7, 2008 [PDF] Federal Trade Commission Comment Letter
    Submitted June 11, 2008 [PDF]
    California Land Title Association Letter to HUD
    Submitted June 4, 2008 [PDF] NAIC Comments on Proposed RESPA Rule
    Submitted June 10, 2008 [PDF]
    Joint Trade Associations Letters to HUD
    Submitted July 31, 2008 [PDF] Federal Reserve Board staff Comment Letter
    Submitted June 13, 2008 [PDF]
    Joint Trade Associations Letters to OMB
    Submitted July 31, 2008 [PDF]

    RESPA Resources
    View the proposed rule.

    Read HUD’s economic analysis.

    Read ALTA®’s initial press release

    Click here to submit your comments to HUD.

    Read a List of Concerns with Proposed RESPA Rule.

    News on RESPA Reform
    December 16, 2008 Fannie Mae Introduces Streamlined Modification Program (SMP)
    December 3, 2008 ALTA Hosts Webinar on New RESPA Rule
    December 2, 2008 Industry Reaction to RESPA: Online Shoppers Left Out [PDF]
    November 26, 2008 Don’t Miss Your Chance to Hear HUD Experts Explain the New RESPA Rule
    November 24, 2008 ALTA to Hold RESPA Teleconference With HUD Officials — Free for Members
    November 19, 2008 K&L Gates Webinar: Finally a Final RESPA Rule
    November 13, 2008 New Final RESPA Rule Significant Victory For Title Industry [PDF]
    November 12, 2008 RESPA Final Rule Posted [PDF]
    November 12, 2008 HUD Issues New Mortgage Rules to Help Consumers Shop for Lower Cost Home Loans
    November 12, 2008 Government Unveils Mortgage Disclosure Rules
    Washington Post | November 12, 2008
    November 12, 2008 Statement From ALTA CEO Kurt Pfotenhauer on RESPA [PDF]
    September 23, 2008 Representatives Send Letter to OMB to Reject RESPA Proposal
    September 18, 2008 HUD Secretary Steve Preston Comments on RESPA
    September 16, 2008 House Conducts Hearing on HUD’s Proposed RESPA Rule
    August 19, 2008 HUD Responds to Dear Colleague Letter [PDF]
    August 18, 2008 HUD Issues New RESPA Guidance
    August 11, 2008 243 Reps Urge Withdrawal of RESPA Rule
    July 22, 2008 ALTA® Action Alert on RESPA Reform
    July 1, 2008 Federal Reserve Board Staff Submitted Comments to HUD [PDF]
    June 18, 2008 NAIC Comments on Proposed RESPA Rule [PDF]
    June 17, 2008 FTC Staff Files Comments with HUD on Proposed Amendments to RESPA Regulations
    June 12, 2008 RESPA Comment Period Closes Today
    June 6, 2008 Statement by Kurt Pfotenhauer, CEO on HUD’s Proposal to Amend the Real Estate Settlement Procedures Act [PDF]
    June 5, 2008 Only One Week Left to Comment on RESPA Rule
    June 5, 2008 Housing Economist Criticizes HUD RESPA Economic Analysis
    May 29, 2008 Only Two Weeks Left to File Comments on Proposed RESPA Rule
    May 28, 2008 FHA Revises Forms: Loan Underwriting and Transmittal Summary, and Addendum to Uniform Residential Loan Application
    May 22, 2008 ALTA® Testifies Before the House Small Business Committee
    May 15, 2008 ALTA® Comments on RESPA by Kurt Pfotenhauer
    May 8, 2008 HUD Extends Comment Period On Proposed Mortgage Reforms
    May 1, 2008 ALTA® Action Alert – Submit Your Comments to HUD on Proposed RESPA Reform by May 13
    April 22, 2008 ALTA® Members Participate in Teleconference With HUD on RESPA Reform
    April 15, 2008 List of Concerns with Proposed RESPA Rule [PDF]
    April 2, 2008 Make Your Views on RESPA Rule Known

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  3. Consumer Financial Protection Bureau Know Before You Owe Project
    May 20, 2011: The Consumer Financial Protection Bureau (CFPB) released initial prototypes of its combined mortgage disclosure form required under the Truth in Lending Act (TILA) and Real Estate Settlement and Procedures Act (RESPA).

    Anne Anastasi, president of the American Land Title Association, issued a statement regarding the initial prototypes
    ALTA urges members to send comments to the CFPB regarding the mortgage disclosure form. Deadline to offer input on first round of prototypes is May 27, 2011.
    Prototype 1
    Prototype 2
    Prototypes for a new HUD-1 Settlement Statement are expected in the months ahead
    Help Your Customers Help You!
    July 13, 2010: The ALTA RESPA Implementation Task Force has updated its Uniform Supplemental HUD-1/1-A Instructions in an editable PDF file format that will further facilitate the transfer of information from lenders to settlement agents in order to create an accurate, compliant HUD-1/1A.
    December 10, 2009: The ALTA RESPA Implementation Task Force has published Uniform Supplemental HUD-1/1-A Instructions that will help your lender customers provide you with the information you need to prepare the new HUD-1.

    Train Your Staff: “Closing Real Estate Transactions in 2010”
    October 16, 2009: ALTA and ALTA’s Land Title Institute are pleased to bring you a training program that captures the knowledge and wisdom of ALTA’s RESPA Implementation Task Force and includes advice from HUD. The 70-minute program is designed to provide an overview of RESPA and the Final RESPA Rule, along with best practices for implementation of the rule’s requirements.

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    Key Documents and Links
    HUD’s Main RESPA Page

    HUD Webcast Archive

    The Final RESPA Rule (Published in the Federal Register)

    The New HUD-1 Form

    The New GFE Form

    HUD’s “New RESPA Rule FAQs”

    HUD’s Settlement Cost Booklet

    Advice and Analysis from the ALTA RESPA Implementation Task Force (Member Login Required)

    How to Handle Transfer Taxes on the New HUD-1 (April 8, 2010)

    ‘Common Practice’ in Locality Determines Disclosure of Transfer Taxes (April 15, 2010)

    RESPA Task Force Analyzes Tolerance Cure Alternatives (April 27, 2010)

    RESPA Implementation Painful, Not Fatal (May 6, 2010)

    How to Denote Owner’s Title Insurance on New GFE/HUD-1 (May 11, 2010)

    Search More Stories for ALTA Members in the Member-Access News Archive . . .

    Additional Resources for Readiness, hosted by RamQuest, hosted by TSS



  5. I believe the legal term is: Respondeat Superior which lays at the feet of the employer the actions of its employees when those actions are performed in ones normal course of business, etc., etc.

  6. @Johngault,

    Except that Matt Weidner yesterday posted what Nevada used to file its complaint against LPS: an agreement, signed by a robo-signer, to sign a particular signature (in that case, Linda Green). So, it is in writing and since it was “company policy”, it definitely would fly to go after guys like Brown.

    Since we know there was an LPS “company policy” of fraud, it is likely that there was a “company policy” of fraud at B of A, Chase and the rest. Especially if most people (who had been raised right) started questioning everything when joining. How could they, otherwise, obtain from so many people fraud at that level?

    We know that employees confirmed that modification files would be directly sent to the shredder (it’s been testified to by many employees, at Wells, Chase, B of A, etc.), we know that people were told to refuse mods, we know that the line “because you are not 60 days behind in your payment and, therefore, not at risk of defaulting” was not part of the HAMP original conditions. We know a lot.

    Probably enough, by now, to get the heads.

  7. Assignee liability came up the other day. Found this in my files:

    Case No. 09-50736, Adv. Pro. No. 10-01077.
    United States Bankruptcy Court, E.D. New York.
    July 18, 2011

    “This adversary proceeding was commenced by Grace E. Ridley, the debtor in this Chapter 13 case, against defendants Deutsche Bank National Trust Company as Trustee for GSSAA Home Equity Trust 2006-17, Asset-Backed Certificates, Series 2006-17 (“Deutsche Bank”) and Allstate Home Loans, Inc. (“Allstate”).

    Ridley seeks to allege violations of Nevada’s Unfair Lending Practices Act and common law claims of fraudulent concealment and fraudulent inducement in connection with her purchase of a home in Las Vegas, Neva
    This case arises out of Ridley’s purchase of a home in Las Vegas in May 2006. The loan was made by Allstate, which employed Mortgage Services Group (“MSG”) to initiate and complete the mortgage application.

    ** The note and deed of trust were then assigned (I doubt it, your honor – sic) to Deutsche Bank, which does NOT (jg emphasis) dispute that it

    steps into the shoes

    of Allstate as Allstate’s assignee and is subject to the claims and defenses that Ridley can raise against Allstate.” **

    Yeahaw! Knew I had seen that somewhere. Hope it will help someone.
    I Deutsche didn’t deny assignee liability, it’s because assignee liability is there.

    I don’t know the disposition of this case. Maybe if Deutsche see it’s actually going to lose, it will merely by motion “deny” the assignment like the case was it weidner? posted the other day……

  8. Enraged – what you just described is a standard of proof that so and so knew, not what the law would prescribe if it were found so and so did know. None of these orders or instructions from ‘higher-ups’ are likely in writing, altho they were so arrogant, wouldn’t actually surprise me one bit if they were.
    When not in writing, it will boil down to credibility of the witness, I would think. No time to research it just now. In the meantime, I stand by what I said. Still, in favor of your argument is that MaryJane when busted must have shouted “I was told to do it!” in a nanosecond. But, that doesn’t mean anyone has ever pursued the “I was told to do it.”
    Why or why not? Don’t rightly know. I’d like to know – wouldn’t we all. The lack of pursuit seems to also stand in your favor, but I still don’t believe it. I believe there is always employer liability WHEN it is found an employee is acting within the scope of his employment. I do know someone who may know, so I’ll try to get the question in so’z we don’t have to go hunting.

  9. @Johngault,

    I can assure you that I have seen countless cases where an employee was indicted for fraud even though he allegedly was acting on his employer’s orders. Unless it was specifically in writing, claiming that “My boss told me to do it” doesn’t fly, regardless of the employee’s rank in the company. In fact, if the employee is indicted, the boss will always be too happy to leave him out to hang if he can save his own skin by doing so.

    If you do some research on… let’s say… insurance employees indicted for fraud and you look at what they alleged as a defense, most of the time, “My boss said i had to otherwise I was going to lose my job” (hence the whistleblower statute, to allow employees to report in anticipation of being fired), you’ll find many such cases. Boss got off. Employee got nailed.

    I have absolutely no doubt that all the CEOs knew (expediency was the name of the game. When you want expediency, you don’t ask questions so long as you get it delivered) and I have absolutely no doubt that all those banks were indemnified and held harmless by LPS (a vendor) the same way that all those banks indemnified and held MERS (their client) harmless. That’s how the game is played.

    Doesn’t mean we can’t go after CEOs…

  10. @chris – there are laws which govern the answers to your question regarding employer liability. It isn’t left to chance. I unfortunately forget them. But IF I recall, it’s something like the liability goes to the employer when the employee is acting within the scope of his employment. I would imagine case law would tell us what has historically been held on this one as to “scope of employment”.
    I’m almost postitive that if you work for me and I tell you to commit forgery (or even if I know and do nothing), I am liable for your act. Whether or not officers of a corp, say, or MY manager is liable for the acts I as your boss told you to do or ignored, I’m not sure. Probably same thing: Was I, the boss, acting within the scope of my employment? Must one prove actual knowledge? I don’t know if that’s necessary. But here’s what I do know: people whose job it is to know DO know, and if the answer is, which it probably is, yes, the boss, and yes upper management, and yes officers are liable, (or any or the above), heads should be rolling which aren’t.
    It’s almost unavoidable, isnt’ it? that this nearly complete systemic failure to prosecute criminally and not just some civil piffle is born of some fear. And we shouldn’t need to start a fund to support A-list assistants in the existing actions, but like I always say, “here’s my $20.00″‘. I got 20.00 bucks. I’ll even throw in 50. I wish I had the energy of my younger years – I swear, I’d start that fund tomorrow and give the reins to the AG’s office to be used expressly for the prosecution of these (and related?) actions. Problem: where ya gonna put the money? Not with the banksters! Psyche! I’m sure there’s a local bank or credit union available or the AG might even be allowed to open an escrow kind of account. Please don’t run off! Any thoughts? Candidates? If that’s what it will take, why not do it?
    None of us have 100k or 200k sitting around collecting dust, but we have thousands of 10’s, 20’s, and 50’s, do we not? Some will and maybe appropriately argue that state’s should fund their own deal, but even if that’s true but it doesn’t’ get us what is needed, what’s being
    right about it get?

  11. joann – you’re on a roll. How about some CA rico?

  12. Just a thought…

    Can you imagine looking for a job with a resume showing that you worked for LPS, David Stern, Steven Baum or the likes? In a short time, we’ll have the exhaustive list of all the active players: banks, lenders, title companies, realtors, sub-contractors, law firms, anyone having played a role in this, big or small.

    There’s gona be a lot of unemployable people out there in a short time… “cuz I don’t know about you but looking at that kind of resume tells me right away everything I need to know about ethics. I don’t care if you were paid $11 or $200/hr, if you participated in the greatest financial scandal ever visited upon The American People, your professional future can’t be that rosy. Unless, of course, you try to hide the 6+ years (or 10+ or however long your worked there) by not disclosing where you were all that time… Either way, it will be interresting. Suspicious and interesting…

  13. @chris,

    I asked the question a while back. Unless I am satisfied that ordering documents forged and using them to misappropriate real estate was in their job description and fully ratified by the board of directors, they were not acting in that context. Under the circumstances, not only are they personally liable but (and it is the best of it all) they are NOT covered by D&O or E&O insurance. Meaning that their own defense costs come… right out of the bonuses they got themselves.

    Ill-gotten gains shall not prosper. I learned it in kindergarten. They did too, if they ever went. So, we just need to sit back and enjoy the show called “When the wheels of justice start turning”.

    Eventually, it will splash all over Romney and Gingrich as well. We’re gona have such a major clean up in this country!

  14. @linda

    I did the same thing. The real estate agents (and their lawyers) don’t care— just another thing the Banksters/Government Mafia/Wall Street/GSE’s counted on—the fact that we would eventually be pitted against each other…

  15. Indictments, not nearly enough of them, but it’s a start.

    I spoke to an attorney yesterday and asked the question: why are we not holding the bosses, CEO’s personally liable for this behavior?

    He said: the employees were working in the capacity of their job…Okay and who told them to do this? Personally, I think this can be done.

    Just my $.02

  16. The A Man, on February 7, 2012 at 10:50 am said:

    “In California it is not a crime?”

    Forgery in CA is defined:

    PENAL CODE SECTION 470-483.5
    470. (a) Every person who, with the intent to defraud, knowing that
    he or she has no authority to do so, signs the name of another
    person or of a fictitious person to any of the items listed in
    subdivision (d) is guilty of forgery.
    (b) Every person who, with the intent to defraud, counterfeits or
    forges the seal or handwriting of another is guilty of forgery.
    (c) Every person who, with the intent to defraud, alters,
    corrupts, or falsifies any record of any will, codicil, conveyance,
    or other instrument, the record of which is by law evidence, or any
    record of any judgment of a court or the return of any officer to any
    process of any court, is guilty of forgery.
    (d) Every person who, with the intent to defraud, falsely makes,
    alters, forges, or counterfeits, utters, publishes, passes or
    attempts or offers to pass, as true and genuine, any of the following
    items, knowing the same to be false, altered, forged, or
    counterfeited, is guilty of forgery: any check, bond, bank bill, or
    note, cashier’s check, traveler’s check, money order, post note,
    draft, any controller’s warrant for the payment of money at the
    treasury, county order or warrant, or request for the payment of
    money, receipt for money or goods, bill of exchange, promissory note,
    order, or any assignment of any bond, writing obligatory, or other
    contract for money or other property,…………

    In CA the statutory penalty is $75,000 for recording false instruments with the intent to defraud:

    “California Penal Code Section 115

    (a) Every person who knowingly procures or offers any false or
    forged instrument to be filed, registered, or recorded in any public
    office within this state, which instrument, if genuine, might be
    filed, registered, or recorded under any law of this state or of the
    United States, is guilty of a felony.
    (b) Each instrument which is procured or offered to be filed,
    registered, or recorded in violation of subdivision (a) shall
    constitute a separate violation of this section.
    (c) Except in unusual cases where the interests of justice would
    best be served if probation is granted, probation shall not be
    granted to, nor shall the execution or imposition of sentence be
    suspended for, any of the following persons:
    (1) Any person with a prior conviction under this section who is
    again convicted of a violation of this section in a separate
    (2) Any person who is convicted of more than one violation of this
    section in a single proceeding, with intent to defraud another, and
    where the violations resulted in a cumulative financial loss
    exceeding one hundred thousand dollars ($100,000).
    (d) For purposes of prosecution under this section, each act of procurementor of offering a false or forged instrument to be filed, registered, or recordedshall be considered a separately punishable offense.115.3. Any person who alters a certified copy of an official record, orknowingly furnishes an altered certified copy of an official record, of thisstate, including the executive, legislative, and judicial branches thereof, or of any city, county, city and county, district, or political subdivision thereof, isguilty of a misdemeanor.115.5. (a) Every person who files any false or forged document orinstrument with the county recorder which affects title to, places anencumbrance on, or places an interest secured by a mortgage or deed of trust on, real property consisting of a single-family residence containing notmore than four dwelling units, with knowledge that the document is false orforged, is punishable, in addition to any other punishment, by a fine notexceeding seventy-five thousand dollars ($75,000).(b) Every person who makes a false sworn statement to a notarypublic, with knowledge that the statement is false, to induce the notarypublic to perform an improper notarial act on an instrument or documentaffecting title to, or placing an encumbrance on, real property consisting of asingle-family residence containing not more than four dwelling units is guiltyof a felony.
    Forgery in CA is defined:

  17. I agree with targeting law firms and also trustees…even realtors. Because I wrote to them and made them aware of the defective paperwork and they chose to plow ahead with the foreclosure anyway and do nothing about it. Just to make a buck while the getting is good. That is not right.

    Then when I kept showing them the problems, they responded by saying, “It’s too late. It’s already been foreclosed.”

  18. ALTA’s website tells you why pretender lenders need those Surrogate Signatures…

    “ALTA® has funded the development of the Mortgage Electronic Registrations System (MERS) to help mortgage lenders eliminate the need for recording mortgage loan assignments when ownership rights change in secondary market transactions. ”

  19. In California it is not a crime?

  20. i wish the next target of Attorney General in 50 States is to target the Law Firms who participated on this foreclosure fraud.

  21. “Why was it necessary to create fabricate, forged documents with false declarations?”

    Why indeed. It is the 13 trillion dollar question that remains to be investigated and answered. Anything less than a moratorium on all foreclosures until this is answered (and all fraudulent possibilites examined not just hearsay that it is because of sloppy paperwork error by “lenders” with an otherwise “legitimate” mortgage) is a windfall to “possible” interlopers and thieves. Laws are meant to make the “possible” impossible no matter who receives a “windfall” as a result.

  22. I don’t know if you guys ever saw this old article from N.C. It tells it all…

    LPS is only now getting hit. Eventually, it will have to be run to the ground. After that, since there won’t ba ny deep pocket left, we’ll be able to go directly after the banks…

    Friday, May 20, 2011
    Former LPS Employees Allege 30% to 78% Error Rate in Borrower Mortgage Records, Contradicting Banker/Regulator Cover-Up

    One investor said that every time he looked at corporate misconduct, “No matter how bad you think it is, it’s always worse”. Lender Processing Services is proving to be a classic illustration.

    The City of St. Clair Shores Employees’ Retirement System is the lead plaintiff in a class action lawsuit against Lender LPS that was amended and expanded yesterday. The suit is against the company and its three top officers, charing them with violations of Federal securities laws with the intent of inflating the company’s revenues and stock price.

    City of St. Clair Shores Employees’ Retirement System v. LPS et al. Amended Complaint May 18, 2011

    Even though the filing is very long, the first third, which provides detailed descriptions of LPS’s purported misconduct, makes for gripping reading even for those who have been on this beat a while. Later on, it cites various media sources to track increasing public recognition of what LPS was up to, and NC is quoted at some length.

    The filing relies heavily on affidavits by 17 confidential witnesses, all former LPS employees, some of them supervisory level. It is thus able to allege that bad practices were widespread and clearly designed and driven by top management.

    The document goes through a detailed account of firm’s use of robosigners, surrogate signers (aka forgers) and its document fabrication service, DocX. While this may seem to be old hat, some of the details are nevertheless intriguing (management at least bothered to try to select forgers based on their ability to make signatures that resembled the original; anyone who questioned whether this activity was proper was fired within a week). More important, this lawsuit does serious damage to the claims of bank defenders (the latest being Karl Rove in the Wall Street Journal) that foreclosure abuses were merely about cutting corners and everyone who was foreclosed on deserved it. But as we’ll see shortly, the underlying records were often corrupted, thus calling into question whether the foreclosure actions really were correct. Remember, LPS’s reach is wide. 14 of the 15 biggest loan servicers are its clients and every one of the 50 biggest banks use some of its services.

    Moreover, the suit also repeats the charge made in other suits, that the LPS business model was built on the illegal sharing of legal fees, and goes even further, alleging that LPS exercises so much control over its “network” attorneys that it was engaged in the unauthorized practice of law.

    But the new and more troubling material is the mess LPS has made of bank records. LPS employees were given password controlled access to borrower payment records and could and did alter those accounts. These passwords were routinely and widely shared, in contravention of good practice. And since everything at LPS was organized around maximizing throughput rather than doing anything correctly, the errors were widespread:

    LPS employees were rewarded for their speed, and this resulted in the violation of security protocols and significant and pervasive errors in the default services that they were providing (e.g., the application of mortgage payments to incorrect accounts). Even when these problems were discovered by the Company’s internal auditors, LPS swept them under the rug. Indeed, LPS knowingly concealed errors in files from clients, network attorneys, and courts to keep clients happy and to ensure that a finger could not be pointed at LPS.

    Now consider the question of the integrity of borrower records. Because LPS was so casual about password control, a large number of employees could and did:

    ….access mortgage records of borrowers and alter them by changing entries, reversing transactions, adding transactions, and moving funds in and out of suspense accounts.

    And the company was not terribly concerned about accuracy:

    There was a huge volume of ledgers that had to be created and problems in loan files that had to be researched and unraveled by CW [Confidential Witness] 16 and his colleagues. These problems included, among others, missing payments, misapplied payments from other loan files, and payments that should have been attributed to other loans…

    CW16 stated that they were “only allowed to look at an issue for two minutes, or five minutes tops.” His supervisors and managers did not want CW16 and his fellow employees to spend time on any loan unless it was incredibly complex. However, they frequently could not finish it within five minutes. According to CW16 “a lot of people didn’t understand the financial side and just winged it.”

    CW16 estimated that 20% of the motions for relief of stay (a filing to allow the bank to foreclose even though the borrower is in a Chapter 13 bankruptcy) were incorrect. This is markedly above the 10% level mentioned by the US Trustee in a Gretchen Morgenson article last weekend (although his comment could be read to allow for even higher rates).

    If you think this is bad, the level of errors in borrower files is worse:

    According to CW16, on top of the 20% of files with phantom referrals, approximately another 35% of files had some problems in them. Those problems varied, and included among others, an ARM that had improperly adjusted up, a failure to properly account for a borrower’s principal and interest payments, and a failure to properly attribute payments between pre-petition and post-petition that led the banks to try to collect pre-petition obligations they were not permitted to pursue.

    Note that the nature of these errors is serious, and from what we’ve seen in various lawsuits and in the press, the numbers are often large, and that’s consistent with the US Trustee’s findings.

    Another employee thought the error rate was even higher:

    Not only did the Company reward speed over accuracy, it also required employees to hide LPS’ errors no matter what the ramifications. According to CW2, who was responsible for auditing bankruptcy files and determining whether LPS had done its job correctly or incorrectly, the attitude at LPS was that LPS “was not paid to audit files in bankruptcy.” This was the excuse used internally to justify performing only a minimal effort and ignoring conflicting information or errors in files.

    Moreover, CW2 explained that when LPS did an audit and discovered that LPS had made a mistake that led an LPS servicer client to present false information to a court, LPS would not let its employees “point the finger at LPS.” Indeed, CW2 explained that there was a known and openly discussed policy during his entire employment at LPS of “not fully disclosing what is known, what is being done and what they are finding.” These details were not disclosed to clients, borrowers or the courts. This policy was openly discussed during department meetings

    CW2 explained that the end result of these practices is a “three-year time bomb” waiting to explode. Indeed, he explained that problems existed in many LPS loans, and he “knows there are mistakes now” that are still being concealed from clients and courts. He stated that: “out of 100 files, I guarantee 78 are incorrect.” The errors ranged from adversary proceeding violations, incorrect agreed orders, missing payments not accounted for, and escrow issues such as clients escrowing on non-escrow loans. As a result of these errors, CW2 explained that LPS was “messing with people’s homes.” Indeed, CW2 explained that “people were doing everything they are legally required to do but losing their homes anyway because of errors.” When this former employee explained to his supervisors that LPS’ errors were putting borrowers at risk of incorrectly losing their homes, the response was “[d]on’t worry about that, it is not our department.

    It’s easy to become jaded over banking industry abuses, but stop a second and consider what this means. To improve its profit margins, the company at the heart of the mortgage servicing industry ran roughshod over everything it touched, including the accuracy of borrower records. And we have bank regulators like the industry lapdog the Office of the Comptroller of the Currency (which John Carney correctly calls “the worst banking regulator in the world” and Simon Johnson says should be abolished) continuing to defend the garbage in, garbage-out process of its recent servicer abuse whitewash Foreclosure Task Force. As we’ve pointed out repeatedly, it failed to do any verification of the accuracy of the servicers’ records, when evidence of servicer fee abuses (pyramiding fees, junk fees) plus LPS-created problems (such as the failure to remove certain types of charges that are impermissible in bankruptcies) means the largely clean bill of health given by the officialdom is utterly bogus.

    The banks and the regulators desperately need to maintain what increasingly looks like a fiction: that all foreclosures are warranted. Because banks process large volumes of checks and credit cards with a high degree of accuracy, they get the benefit of the doubt as far as how they keep other accounts. So it’s easy for the industry to assert that they are ever and always right. And even allowing for a considerable amount of bank errors, it is no doubt also true that the majority of foreclosures are probably warranted. Many people have suffered income losses so large that they are hopelessly under water. But borrower defense attorneys have long alleged that a high percentage of the cases they represent are servicer driven foreclosures, and the LPS and US Trustee revelations make these claims seem far more credible than they might have a few months ago.

    It’s deeply offensive when we have officials like the acting Comptroller of the Currency John Walsh provide cover for this deep-seated corruption as he did in a speech yesterday:

    Fortunately, we found relatively few cases in which a foreclosure should not have proceeded: although a small number of borrowers were entitled to protection because of a modification in process, bankruptcy filing, or military status, all foreclosed borrowers in the sample were seriously delinquent. And while the sample was small, I don’t expect to see much change in those proportions.Our mortgage metrics project, which captures loan-level data on 63 percent of all first-lien mortgages in the country, found that 94 percent of borrowers foreclosed upon in 2010 were at least six months past due on their payments.

    It’s easy not to find anything if you don’t verify underlying processes and check for data integrity. And if you think it’s been hard for the banks to wean themselves of robo-signing, imagine what it will take them to fix this mess. It should be no surprise that bigger and better PR is their preferred remedy (I’m told Karl Rove does nothing unless he is paid).

    If these allegations are proven to be accurate, this misconduct ought to be criminal. And I’m afraid, like so much of the damage banks have done to citizens and communities, this too will prove not to be.

  23. […] Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: 60 minutes, AHMSI, appraisal fraud, attorney general, auction fraud, Chris Koster, credit bids, DocX Indictment, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, forgery, housing market, housing prices, investors, linda green, LPS, Missouri, mortgage fruad, mortgages, Robo-Signing, settlement, strategic default Livinglies’s Weblog […]

  24. I believe there is a reason for going after LPS rather than directly after the banks: anyone doing business with any third party in the US knows to have that third party indemnify and hold harmless the client it serves. I would bet anything that, were the banks to be named in any such action, they would immediately turn around and tell LPS: “You signed the contract, we paid you to do a job. You chose to screw up. Now, indemnify us, hold us harmless and take over the entire defense of this claim against us.” Inother words, banks will seek the protection of the law… you know, that same law they have intentionally and willfully breached, but that’s another story…

    In any event, LPS is the deep pocket for right now. And it is only fair, right and just to also go after Brown: as the founder and CEO of that outfit, she put in place the policies and same were applied under her watch.

    With or without our federal government, this entire atrocity will be completely uncovered and reversed. May take some time but too much is known already: we don’t have the luxury of backing off any longer. If states have to do a federal job of upholding the lkaws, this is it for our federation. Might as well become a continent of 50 sovereign states without any centralized government. Some of them may end up third word countries (FL is on the way…) while others may end up on top. If the settlement goes on as scheduled, I don’t give this federation much time left… The way Europe will split may very well be the way the United States of America deunify…

  25. just emailed a copy from another site re this to the Maine Attorney General asking if it’s a crime in MO isn’t it a crime in ME???

  26. Just saw this. I have apprised the Minnesota AG’s office of the signature issue for documents created and recorded by Wells Fargo. I am relieved to see I am not the only one pushing this matter. Someone must have led the charge in Missouri. Bravo to them! Now, Minnesota, get on board!

  27. Yippeeeeee!!!!

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