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Foreclosure Contractors Face New Scrutiny From States

While federal and state officials investigating flawed foreclosures have largely focused on holding the banks accountable and bringing relief to wronged homeowners, officials in a few states have begun targeting the more obscure middlemen of the foreclosure scandal.

Prosecutors in California and Illinois have sent subpoenas to Lender Processing Services, one of the largest firms that processed mortgage documents for the banks. (Read more about LPS in our guide to who’s who of the foreclosure scandal.)

As we’ve noted, the firm—which helps handle more than half of all U.S. mortgages—has been accused of using the same “robo-signing” practices as the major banks, such as signing and notarizing documents that appeared inaccurate or invalid. Bank employees have testified under oath that they relied on LPS to vet the information in foreclosure documents.

LPS has had its share of legal troubles over its mortgage processing. Michigan's attorney general announced an investigation last month into potentially fraudulent mortgage documents processed by an LPS subsidiary. (LPS has said that it discontinued the practices used by the subsidiary.) Along with the big banks, the firm recently received an order from federal regulators to correct problems with its processing of mortgage documents. (Read that consent order.)

Illinois Attorney General Lisa Madigan also sent a subpoena to Nationwide Title Clearing, another firm contracted to provide mortgage services to banks. As we’ve noted, Nationwide Title Clearing employees have testified to robo-signing thousands of mortgage documents—known as assignments—that establish the ownership of a mortgage loan and are key to establishing who has the right to foreclose on a homeowner.

Nationwide Title Clearing said in a statement that its procedures have been “thoroughly audited and examined for accuracy” and that it would cooperate with any investigation. LPS declined to comment.

The latest actions on foreclosure problems as an attempted comprehensive settlement by all 50 state attorneys general has hit a few roadblocks. As we noted in our cheat sheet on bank investigations, the negotiations have been hampered by disagreement with the banks over the size of penalties as well as some disagreement among the attorneys general—at least eight of whom have opposed any settlement that would require banks to cut borrowers’ mortgage debt.

Bloomberg reports today that Bank of America has also received independent scrutiny from the attorneys general of Utah and Connecticut accusing the firm of invalid foreclosures and insufficient loan modifications. Utah warned that it would sue.

Michael Haltman

May 26, 2011, 2:28 p.m.

If a homeowner is facing possible foreclosure and is looking to modify their mortgage, they need to find out what these modification companies can and cannot do and charge.

This article will give them all of the details:

http://michaelhaltman.com/2011/05/26/loan-modification-rules-that-every-homeowner-must-know/

Mike

Hey, Marian. Please cross-post this to the loan mods section.

MODIFICATIONS ARE A LIE—-IT IS UNSECURED DEBT—-WAKE UP PEOPLE—-YOU ARE MODIFYING SOMETHING FRAUDULENT—-

GO TO livinglies(dot)wordpress(dot)com

This is another nice article BUT, let face the truth. This is America, banksters and anyone else who thinks they can get away with something will do it, and do it, and do again until they’re caught.

So far no one has mentioned the real culprits, The Courts in juducial states and the contables and sheriffs in non-judicial states.

I must have read 150 stories lust like this one where they are blaing the bankster, the processing companies, etc, etc, etc.

Someone clever such as an Angelo Mozilo or some other streetwise crook knew the system and how easy it was to defeat. He or she started doing this stuff 20 years ago and made a fortune, then the big guys got involved invented MERS and the race to the bottom was on.

Why was it easy ro defeat, you ask? The answer is the court system that the monied interests in this country have altered by making elected and appointed judges beholden ln lne way or the other.

The majority if not all judges in this country are trained lawyers and attended law school and maybe learned sonething and atleast know basic principals of law and knew from step one that what was going on was illegal and immoral but let it run wild anyway.

The only way this corruption can be cured and the mortgage crisis abated, is to clamp down on this obviosly corrupt court system and get these people back into the gutter where they belong.

Irronically, Republicans are constantly screaming about “worthless and ineffective school teahers” but somehow they never seem to complain about the corrupt judicial system. Is it because they created it at the behest of their friends who have bought their loyality?

The whole system feels rotten to me.

We bought a foreclosed house. I believe that we benefited, on price, from the bank’s hurry to unload the house. We soon discovered that the banker handling the case was losing his job within the month.

However, six months later we were denied refinancing and finally figured out the root of a series of confusing claims against us. The title company had researched and recorded the wrong APN number for our sale. We learned that we owed back taxes, large utility bills, plus late fees and penalties accrued by the previous owner. We had actually been paying taxes on someone else’s property!

The title and title insurance companies, located thousands of miles away in opposite directions from us, did not respond to our phone calls—in fact no person would ever even answer the phone—for nearly a year, at which point we threatened a law suit.

That inspired some action. The title insurance company responded that they would research the mistake. Eventually they granted us basically what we owed—not including additional new costs such as the cost of losing the interest rate we had hoped to gain by refinancing.

Another apparent scam? The previous owners stripped the house of everything down to the door stoppers. I was told that the bank called it a theft and received insurance money for it. The neighbors knew it was the previous owner who had “stolen” the property but no one apparently asked.

And another? The windows, only 3 years old, had already failed. The company advertises a lifetime guarantee on its windows—but upon closer scrutiny we discovered that it was only to the original owners of the house. Though windows should last many years, these nearly-new windows did not have to be replaced because we were not the original owners.

Once again, it took substantial persistence, and finally threats, to produce action. The company did replace the windows.

James B Storer

May 27, 2011, 9:25 a.m.

Trubee:  Your last paragraph, in one sentence, burrows into what seems to be securely contained within our modern Gordian knot.  Nice going.  In Propublica comments I initially tried to avoid Democrat vs Republican discourse.  This is not possible as these two parties have worked arm-in-arm to achieve the power they are given to wield.
It has been constant Republican buzz for decades that we must separate education from the Federal government.  The goal is to move through a series from public school (“socialism”, of course) thru private school-charter school thru corporate managed schools(this step is now in progress) thru corporate controlled curriculum to all-out corporatism control (Fascism).  Their whining that public school teachers are incompetent is merely part of their propaganda for aboloshing the system.  I shudder to think what the level of competence would be among a teaching cadre hired by the Chamber of Commerce.
The seemingly goal-oriented corruption in our judicial system(s), from traffic court to the Supreme Court, is simply too blatant to be denied by a person possessed with common sense, logical thinking, and an affection for our constitution and nation.  The corruption is extant.  We used to have a saying that “ignorance of the law is no excuse.”  Use of such an axiom in court would be nonsense today.  Laws and regulations are so voluminous and ambiguous that the lawyers, judges, politicians, and corporations who write and make their living by them often cannot interpret their own writings, have no concept of right from wrong, and often do not care.      Skartishu, Granby MO

James:  I agree….my boss, who absolutely abhors President Obama and the Democrats, keeps saying that it’s the Democrats that are pushing for socialism…..is this true in a sense?  Personally, if I read your post correctly, it’s actually the Repubilcans who are the problem.  I think most of the U.S. just wishes that the two parties would get off their high horses and work together to get something done instead of CONTINUALLY fighting against each other and getting NOTHING accomplished.  We have the same problem in California with the Democrats in our State government system…..they will vote down ANYTHING that a Republican legislator puts forth even if it would help our budget problems.  This is getting totally out of hand both in State and Federal government!!!  Unfortunately, with our politicians ALL bought and paid for by Big Business….you and I have no say in anything and we suffer the most!!  Thanks for your post…

James B Storer

May 29, 2011, 1:26 p.m.

Didi Paano:
Your comment “…keeps saying that it’s the Democrats that are pushing for socialism…..is this true in a sense?”  My answer is yes, in a sense, sometimes.
My previous comment to which you refer was not stated clearly.  My reference to public schools and in parenthesis, socialist…, was meant to use the word socialist sarcastically.  Back in the 1950’s and 60’s the Republicans used “communistic” to refer to any program of the federal government of a social nature unless, of course, the program benefited business and not the citizenry.
This became a little hard to sell, so they switched from “communism” to “socialism.”  The problem with most “isms” is that they become so misused, and so misinterpreted by ignoramuses, that the meanings eventually become confusing and overlapping.
Our K12 school system is far from perfect, but the fault lies largely with micromanaging by our two overly powerful and corrupted political parties, and by incessant campaign propaganda by the Republican Party assisted by burgeoning corporatism.  Our school program is designed to provide a universal, broad-based curriculum and equitably available education to our citizens.  To turn this over to private enterprise would eliminate Universal, Broad-based Curriculum and Equitably Available from the system.    Skartishu, Granby MO

Stop sending lawyers to Washington. All they know to do is debate.

It’s just what they do.

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