Attorney General Kamala D. Harris Subpoenas Loan Processor LPS in Wide-Ranging Probe of Mortgage and Foreclosure Practices
LOS ANGELES, CA – May 27, 2011 – (RealEstateRama) — Attorney General Kamala D. Harris announced she has subpoenaed Lender Processing Services, Inc. (LPS), as part of her continuing probe into “robosigning” of mortgage documents and other illegal activities in the mortgage servicing industry, especially misconduct affecting borrowers facing, or in the midst of, foreclosure.
Robosigning is the practice of signing documents used by banks or mortgage servicing companies to foreclose on borrowers without verifying their accuracy – often thousands of different documents signed by a single individual per day. In many cases, the robosigners don’t even read or understand the document they are signing.
“California homeowners have been exposed to fraud and crime at every step of the mortgage process,” said Attorney General Harris. “Justice demands we come to their aid and a key step in that is to investigate robosigning and the potential for inaccurate or unjust foreclosures.”
Former LPS employees have testified that LPS designees “robosigned” foreclosure documents. LPS prepared and recorded these foreclosure documents on behalf of many of the largest mortgage lenders and servicers in the country.
The Attorney General’s investigative subpoena requires LPS to produce documents and provide written answers to questions from the Attorney General’s office. The time period covered by the subpoena runs from Jan. 1, 2007, until just before the compliance date, which is no later than June 24 of this year.
LPS, based in Jacksonville, Fla., with several offices in California, provides loan management services to mortgage lenders, including document preparation services and a software platform used by much of the mortgage industry. According to its website, LPS systems are used for servicing over 50% of all mortgages in the United States and more than 80 financial institutions contract with LPS to service more than 30 million loans with an outstanding principal balance exceeding $4.5 trillion.
Attorney General Harris warned that the risks posed by robosigning are particularly dangerous in non-judicial foreclosure states such as California, where the courts typically are not involved in overseeing the foreclosure process.
On Monday, Attorney General Harris announced the creation of a Mortgage Fraud Strike Force, staffed by two dozen Department of Justice attorneys and investigators to monitor and prosecute violations at every step of the mortgage process, from the origination of mortgage loans to the marketing of mortgage-backed securities to the investing public.
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