U.S. Probes Foreclosure-LPS Data Provider

(First a Flashback to early 2009) LPS’ name comes up again and again. The role LPS plays seems to be analogous to the “cleaner” used by less-than-scrupulous  who need to remove embarrassing evidence, replace it with squeaky-clean evidence that supports their special interest. (For more info or for fun, check out the 1994 movie:


Or it can be compared with the private companies that were hired as private contractors who became mercenary hit-men in Iraq. Being a  paid gun in the assault of foreclosure victims has proven to be a very lucrative business plan for anyone without an active, functioning conscience. And at the very top of the heap, along with the long line of ambulance chasing so-called law firms that ask foreclosure victims to sell their wedding rings, send them $7,000 and abscond with the money, is a grotesque mutant breed of business that can fall into the general category of “property preservation” companies. They can be more accurately described as “special Interest Preservation” companies. But what they are is quite similar to set designers, they make that look good from the outside, so no one bothers to look under the hood or behind the doors.

Early in the establishment of this website there was a family who was in negotiations with WAMU / Chase for a loan modification. Previously never even a day late with a mortgage payment and haven fallen behind, Chase assured the family that they had no intention of foreclosure before they can discuss all the other options. The couple sent all required documents to Chase by certified mail The docs were received and signed for in the Chase office in Florida and the couple was told to wait patiently while the paperwork was processed. Then one day, LPS sends a private contractor to the family’s home to drill out all the door  locks on their home while the mom was nursing her babies inside, attempting to expose her children to street traffic and possible death or injury. Back then, LPS was just a name. (The family showed us the work order with a WaMu’s authorized signature. Now it seems to be a pattern in practice. As does what back then seems strange: Paperwork mysteriously disappearing… Well, from thousands of families stories all over the Internet, this is the only way the paperwork ever gets handled. Royal customers getting the royal treatment: Straight to the round file!

It does not surprise us to see litigation arising against LPS, it’s sad that it has taken so long. But remember, the guy paying the hitman is even more guilty than the poor slob desperately willing to do anything for a buck to feed his family. Let’s not lose sight of where the work orders come from.

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

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.

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.

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