Nevada Files Suit against LPS; LPS Responds

by devteam December 21st, 2011 | Share

Another shoe dropped last week as the Nevada attorney general brought suitrnagainst Lender Processing Services, DOCX, LPS Default Solutions and other LPSrnsubsidiaries for engaging in deceptive practices against Nevada consumers.   The lawsuit includes allegations ofrnwidespread document execution fraud, deceptive statements on the part of LPSrnabout efforts to correct document fraud, misrepresentation about its fees andrnservices and “evidence of an overall press for speed and volume that preventedrnthe necessary and proper focus on accuracy and integrity in the foreclosurernprocess.”</p

Attorney General Catherine Cortez Masto said of the suit, “The robo-signingrncrisis in Nevada has been fueled by two main problems: chaos and speed.  We will protect the integrity of thernforeclosure process. This lawsuit is the next, logical step in holding the keyrnplayers in the foreclosure fraud crisis accountable.”</p

The suit, filed in the 8th Judicial District of Nevada, followsrnan investigation into LPS’ default services of residential mortgages in thernstate which has led the nation in foreclosure activity for 59 straightrnmonths.   LPS’ misconduct was confirmed throughrntestimony of former employees, interviews of servicers and other industryrnplayers, and extensive review of more than 1 million pages of relevantrndocuments.  Witnesses described LPS, thernnation’s largest provider of default mortgage services, as an assembly-linernsweatshop, churning out documents and foreclosures as fast as new requests camernin and punishing network attorneys who failed to keep up the pace. </p

The suit alleges that LPS: </p<ul class="unIndentedList"<liEngaged in a pattern and practice of falsifying,rnforging and/or fraudulently executing foreclosure related documents; </li<liRequired employees to execute and/or notarize uprnto 4,000 foreclosure related documents every day;</li<liFraudulently notarized documents withoutrnwitnessing their actual signing;</li<liImplemented a widespread scheme to forgernsignatures on key documents to ensure that volume and speed quotas were met;</li<liConcealed the scope and severity of the documentrnexecution fraud by claiming the problems were limited to clerical errors;</li<liImproperly directed and/or controlled the workrnof foreclosure attorneys by imposing inappropriate and arbitrary deadlines thatrnforced attorneys to churn through foreclosures at a rate that sacrificedrnaccuracy for speed;</li<liImproperly obstructed communication betweenrnforeclosure attorneys and their clients; and,</li<liDemanded a kickback/referral fee fromrnforeclosure firms for each case referred to the firm by LPS and allowed thisrnfee to be misrepresented as "attorney's fees" on invoices passed on to Nevadarnconsumers and/or submitted to Nevada courts.</li</ul

In response to the suit LPS issued a press release strongly disputing  allegations in the complaint.  The company said it had cooperated with thernAttorney General’s office for more than 14 months to resolve the inquiry “butrnits efforts have been frustrated by the Nevada Attorney General’s decision tornoutsource its investigation to Cohen Milstein Sellers & Toll PLLC, arnplaintiff’s law firm located in Washington, D.C., in apparent violation ofrnNevada law.  The complaint highlights misconceptions about LPS and seeksrnto sensationalize a variety of false allegations in a misleading manner.”</p

LPS said it had previously disclosed some issues with some of its ownrndocument execution practices it had discovered during an internal review, butrnwas “not aware of any person who was wrongfully foreclosed upon as a result ofrna potential error in the processes used by our employees” and will “vigorouslyrndefend against the complaint.”

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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