ProPublica

Journalism in the Public Interest

Cancel

Major Foreclosure Contractor Underplayed the Extent of Document Flaws

In our primer on the players in the foreclosure scandal, we noted that the biggest foreclosure contractor to which banks outsourced servicing tasks, Lender Processing Services (LPS), has been accused of flaws in the processing of key mortgage documents. The company has said that it is “not aware of any defects in our signing and review processes that resulted in the wrongful foreclosure of any borrower” and has maintained that flaws in its signing practices were limited to a subsidiary, DocX, which was shut down soon after the wrongdoing was discovered in 2009.

But Reuters reported on Monday that the company—which counts all 50 of the nation’s largest banks as clients for at least some services—may be in more legal trouble than it has so far let on.

DocX continued operating longer than LPS had told investors, signing its last document in May 2010—long after the U.S. Attorney’s Office began investigating the firm, as LPS acknowledged in its 2009 annual report.

Separate from the subsidiary, at least one of LPS’s own offices had signed and notarized large quantities of documents that seemed similarly suspect. These mortgage assignments may not have transferred the loan’s ownership before a foreclosure attempt was filed, which according to some state judges warrants dismissal of the foreclosure case.

As the company came under fire for its practices, it began to transfer signing operations out of its own offices, according to Reuters. The company acknowledges that it “transitioned away from signing documents on behalf of its customers,” and instead sent personnel to work “on-site at client locations” to set up signing operations there and provide training.

LPS has also been accused of fee-splitting relationships with foreclosure law firms, a charge LPS denies. (In order to prevent kickbacks from being passed on to clients, most states have laws barring lawyers from sharing legal fees with non-lawyers.) Reuters explained how the system works, noting that LPS says the firms pay the fees to use the LPS system, not in exchange for work:

Reuters has obtained new details of how the relationship worked from copies of the "network agreements" the law firms sign with LPS, among other sources. Interviews and records from court cases show that this system often worked to the detriment of homeowners struggling to keep their homes.

LPS says that clients are the ones who pick law firms to represent them in foreclosure cases. But copies of its agreements with clients reviewed by Reuters state that the company's clients sign up to use LPS's network of lawyer[s]. The agreements and depositions from lawsuits show that when a homeowner goes into default, the LPS system automatically selects a law firm in its network, sometimes using criteria set by a client, and transmits an offer of work that pops up on the law firm's LPS Desktop screen.

The firm has no more than a couple of hours to accept the job. And if it does, it immediately agrees to pay an up-front fee to LPS. The law firms also pay LPS a monthly fee for use of the LPS Desktop system.

LPS has been known to push its law firms to move quickly on the legal paperwork for foreclosures, assigning firms “green,” “yellow,” and “red” ratings based on speed. LPS denied that the ratings were used to punish the slow firms, but were given so that firms could compare efficiency.

Last year, a federal bankruptcy judge noted that the LPS system had major flaws which became apparent when a law firm submitted documents that contained incorrect information from LPS and were signed without the review by lawyers. Though the judge's opinion focused its criticism on the law firm, LPS has also been the subject of recent lawsuits and is currently being investigated by the Office of the Comptroller of the Currency.

Inform our investigations: Do you have information or expertise relevant to this story? Help us and journalists around the country by sharing your stories and experiences.

Nissim Sasson

Dec. 7, 2010, 4:43 p.m.

And it goes on and on and on….Property rights are being violated all over the country by these Gangsters, Banksters and Servicers When is it going to stop?
Property rights are the core of the american freedom and capitalism, but no more in our country God Help us !

Nissim Sasson, I agree with you 100%! The little guy does not stand a CHANCE against this tsunami of corruption.

Laura Baldwin

Dec. 7, 2010, 4:55 p.m.

I wish some of these foreclosure crooks could be left alone in a room with some the people they scammed out of their homes.  Maybe then they would understand the frustration that homeowners feel over losing their home because of underhanded bookkeeping.

Laura-That would be according to the size of the room. I would prefer a phone booth…just 2 weeks removed from having shoulder replacement surgery, I would still pay to have that opportunity TODAY!

And as more and more scandals are uncovered the less our legislators seem to be able to deal with it.  Probably because (as in the Country Wide scandal) these folks have gotten sweet mortgage deals for themselves!

No foreclosure filing should go unchallenged.  Many of them can be defeated on obvious flaws.

The documents throughout these foreclosures are suspect.  Usually, they did the assignment of mortgage WHEN the default occurred, not before.  Many of the assignments were done AFTER the lis pendens foreclosure action was commenced in a judicial state.  In a nonjudicial state, the same thing happened.  Remember, most of the loans never made it into the trusts either.  Worse yet. many of the loans were sold multiple times to investors. .(JavaScript must be enabled to view this email address)

The question is this:  when will enough be enough?  How many bad acts and bad actors does it take to shut this “foreclosure play” down?  We cannot give up our fight for integrity, fairness, and moral decency and to save our homes.  Enough is enough here and now.

Heed the advice of experts like Suze Orman and others, lawyers, congressmen, etc.  DON’T PAY A PENNY TO YOUR MORTGAGE LENDER!!!!  IT WILL TAKE THEM YEARS TO UNRAVEL THE MESS THEY MADE.  DON’T LEAVE YOUR HOUSE UNLESS THE BANK CAN PRODUCE A REAL MORTGAGE, A DEED, A PIECE OF PAPER THAT SAYS YOU HAVE AN ACTUAL MORTGAGE.  BECOME A SQUATTER IN YOUR HOME AND DON’T GIVE UP.

For the past several years mortgage lenders have been exposed repeatedly. Yet, still NO prosecutions or arrests. They persistently ignore the blatant illegal acts by thieves & liars. 

Since Jan 2009 - 4.6 million families were tossed to the streets. How many families were sold illegal loans? How many illegally foreclosed?  Our justice system has betrayed these American families.  Our justice system is as vile & corrupt as the Soviets, China, Castro, & Chavez.  Why is the US Gov & Justice Dept allowing the disgraceful slaughter of American families?

Barack Obama & Eric Holder are literally selling these families into quasi-modernized SLAVERY.  These families are now MARKED for life - DEADBEAT - is BURNED SQUARELY ON THEIR FOREHEADS to remain as shackle scars.  They will pay higher fees & rates for EVERYTHING they purchase.  They are marked for life because both Obama & Holder are COWARDS and despicable pukes!  They are an offense to humanity.  In light of the overwhelming evidence - it is not possible for our courts to conclude that 10-20 MILLION American families suddenly decided to obtain mortgage loans they knowingly could not afford.  How can these men even face the morning?

Will it take McVeigh U-Haulers exploding at the entrance of these lenders & crony foreclosure mills?  What will it take?  Does Holder believe busting 2-bit hedge-fund criminal users will appease the American people while their lender/bribing financial terrorists continue their relentless addictive rampage to rape & pillage whomever they desire?  Will it take violence against the families & employees of these legalized-financial-terrorist insurgents? 

Never has our Gov been so disgustingly despicable since the stain of slavery.  Eric Holder is a disgrace to this country.  He is the essence of vile betrayal.  The FBI has known about these loans designed to self-destruct to create PAYMENT SHOCK and inevitable foreclosure for years.  The evidence is undeniable.  When our military “sworn to protect the Constitution” move to takeout those pretty 100-story buildings of CitiBank - Bank of America - AIG - Goldman - Wells Fargo - Chase - etc…?  When will one of our military release a 2000-lbs on these buildings to eradicate the ENEMY from within?  WHEN?

Just my 2-pence…

The real crimes are occurring in the bankruptcy system. The mortgage lenders and servicers are using the system to collect bogus fees and charges on otherwise invalid mortgages.  At the root of most foreclosures is a debtor that can’t pay. Despite baf paperwork you still have someone with the inability to pay.  In a bankruptcy the debtor is trying to pay the mortgage and the servicer abuses the system to steal from the debtor.

I agree with Jeff. No person should pay for a loan that they did not legitimately receive. Also possession is nine tenths of the law. If you remain in your home until you are legally evicted by a court order you still are the owner. Just because the lender forecloses doesn’t mean that they have the right to do so. If they had no right to foreclose it’s a fraud and, any buyer at the foreclosure auction has no right to take possession of your property. Any of these actions can be contested in court. That’s how the Mortgage Debt Reset Program works.

One problem . once a mortgage has been assigned to a servicing corporation, which it usually was after 1 or 2 payments are made, by paying only 1 payment to that servicing company, you gave up your right to use chain of title as your defense. In other words, even if there was improper documentation as to assignment of the mortgage, the servicing company will come in with your original signed mtg. document and an assignment document which may have only been signed a few days before the summary judgment hearing, assigning it to whatever bank is foreclosing on the note, and the judge will go along with it. Even though it may have went into a pool of mortgage backed securities that no one note holder/mortgage company actually owned. Filing the correct paperwork and requests for dismissal, etc. only bought me 15 months before I lost a rental house, so the bank gets it back thanks to the corrupt judge who ignores due process. Makes you think that all the sub-prime mortgages and falsely inflated property values was a plan by the banking industry as a mass land grab that backfired.

Just for the record:  I paid every mortgage payment on time per the loan agreement.  It was the bank that broke the law and the contract, not me.  I did everything I was supposed to do.

Poor, oblivious Americans are so busy rying to feaher their own nests they totally disregard the eagles swooping down and eating their hatchlings! The fingerprints of the hired thugs of the Wealthiest Old White Male 1%-ERS is all over the MULTITRILLION DOLLAR Foreclosure Scam.

Some 20 MILLION American families stand to have their homes STOLEN by the bankers FRONTING for the 1%-ERS withth help from a BOUGHT Congress & Court System. Americans must remember it took just 3% of American Colonists ( with the help of another 20% of ‘sympathizers’ )to drive out the British and create the United States. NOW, WHO WANTS TO BE PART OF THAT 23% to RE-Create America?!

@ Laure & @ Roy - Whoa!!
Gotta respectfully disagree with you about letting fc victims alone in a room with LPS. That’s too….private. That does not change the system. That does not extract long-term punishment and accountability to all players. That’s too…easy.
How about this: fc evil-doers are all evicted from their homes (but allowed to “enter” the HAMP process and fight teams of well-paid bank lawyers to regain them. Good luck with that!) They have to apply for new jobs with the credit score the fc will yield, and they have to try to secure leases and maybe car loans with that FICO score.
They must testify against the corp. entities that led the housing downfall (or the people, if the company is kaput. Hello, Angelo Mozillo!! We’d like a word with you…)
For every count of felony conviction that results in time in prison time (no probation) for the evil-doers, the fc enablers gain 10 pts. on their FICO score. That means they might spend half a decade, not a decade, with no ability to borrow money or buy a house. Or get a job. Or security clearance. Or student loan for themselves or a child.
The HAMP program *as it is now* would grind forward for them. They could spend free time frantically FAXing over docs, lost in phone trees and waiting on hold. They could receive confusing letters on the same day from the same bank, and have contractors break into their homes to “change locks” - which is code for toss the place while police stand idly by.
Once they have had years and years and years of this stress and anxiety, they can…keep renting. Keep working the crap job they got with a trashed FICO. Watch their kid take a bus to comm college and sleep on the sofa of their s—- apt., when the student loan fell thru and the teen could not go to college and have a dorm room.
Watch their retirement funds (if any) drained in middle age just for living expenses, while they panic about “bag lady” old age. Skip medical and dds treatment for themselves and their….kids.
Hear Obama tell bloggers that the HAMP program was little utilized out of an abundance of caution about theft and con artist manipulation. Consider - and reconsider - voting for the president, who OK’ed billions with no strings to banks that promptly stored the cash and gave themselves bonus checks in the millions. No delays for that money,, it went out in one afternoon. No presidential worries there about conniving - it’s all good by Barry H. Obama when it is a bank on the receiving end of tax dollars. Have @ it, Goldman Sachs! No interest for you nice folks.
THAT would be a better fate for the fc evil-doers than a beat-down, IMHO.
Come to think of it, I want Mozillo in an orange prison jumpsuit, soonish. Rather than let him chill in the big house, watching TV and learning to shower without bending over, let’s farm him out to a work placement. He could clean homeless shelters, 14-hrs. a day, six days a week. The other day he could do tax returns and assistance applications for returning vets, who have a tanked economy to greet them after fighting in a senseless war. It is clear Mozillo is good with finessing the system. Let’s let him sweat off some of that guilt and then help some vets. This can go on for the rest of his life. A fair trade in return for his key role in ruining the American housing market….
Let me think up something good for Lloyd Blankfein and Timmy G. They can room together in the big house and then….

Starry!  I wish I’d written what you wrote, you’ve described my feelings to a T.  Fantastic!  I lost my house 2 years ago as a Countrywide “customer” and we still receive periodic “thanks for having a mortgage with us” from BOA—who have tracked us down in our house rental.  It seems like our family can’t get away from the foreclosures.  Now my landlord is in foreclosure with BOA….and it’s NOT because we’re not paying the rent!

My landlord thinks he’s going to a refi on his house because he’s ill.  I told him “good luck with that, at least you own another house and live there—because this one is GONE!”

Starry- I like your way of thinking! Being a “realist” I know that both scenarios are fantacy. I am guilty of what most people desire…instant gratification. Plus the “up close and personal” effect in my fantacy would be both immediate and final. Truth be told your solution is the better of the two…but leaves the “bad guys” with time and opportunity to MAYBE escape their fate. At least we can still dream!

In the end, when companies are allowed to become bigger than a small country and then team-up with our local and federal governments, the more we can expect to become mere pawns.

Starry - though I tend to agree - sort-of…  I still think these banksters and Wall Street pukes need to be SHOT “AFTER” their families were taken out first. 

These people are the most vile arrogant pukes on the planet. In fact, they are 10-TIMES WORSE than al-Qaeda or extremists…  They and their families should be eradicated from the planet as CLEAR message to ALL THOSE that would EVER consider such another travesty again. 

Allowing them and their families to live is a waste of CARBON credits.

Possibly - maybe their families could be released in the depths of Afghanistan with the Taliban or sold into slavery in the Middle East.  Whatever the consequence, it should be so hyper-extreme to leave a permanent mark on all future societies.

Maybe donations to al-Qaeda for the HD videos of the bankster’s beheading sent to each Wall-Streeter’s office would help get the message across. 

Just thoughts…

acmodspecialists

Dec. 8, 2010, 6:51 p.m.

How about these ones better?
1-Break up the banks in to pieces so none of these Banksters worth more than a 100 Billion, they wont be To Big to Fail anymore and at the same time will create competition and ultimately better service to the customer instead of being treat them like pawns
2-Give the HAMP program to an independent agency that will give fair and balance answers instead of answers that will benefit the bank, like the new protection agency manage by Elisabeth Warren
3- Stop all foreclosures until banks clean up there mess and proof they are the real owner of the mortgage Note
4-Fire Bernanke
5-Fire Geitner
5-Fire Eric Holder

Or maybe these ones are more Fantasy than the ones previously describe here in comments?

mmm..they probably are bigger fantasy that these will happen

acmodspecialists

Dec. 8, 2010, 6:54 p.m.

How about these ones better?
1-Break up the banks in to pieces so none of these Banksters worth more than a 100 Billion, they wont be To Big to Fail anymore and at the same time will create competition and ultimately better service to the customer instead of being treat them like pawns
2-Give the HAMP program to an independent agency that will give fair and balance answers instead of answers that will benefit the bank,  The new protection agency manage by Elisabeth Warren can do that (give fair answers)
3- Stop all foreclosures until banks clean up there mess and proof they are the real owner of the mortgage Note
4-Fire Bernanke
5-Fire Geitner
5-Fire Eric Holder

Or maybe these ones are more Fantasy than the ones previously describe here in comments?

mmm..they probably are bigger fantasy that these will happen

Can someone give me some insight to the HAMP program?? Apparently I know nothing about the program that I thought was using. I am failing all the way around. I provided all documents to the counselor with the HAMP program in Sept. They confirmed that I had done all needed and wait for the my lender (BOA).  I called BOA and they informed me they needed financial documentation I mentioned I was participating in the HAMP program but submitted the information again directly to BOA. I spoke to my counselor again and he mentioned that they were well aware of the treatment Bank of America was handing out. and for me to stay strong!!  Really are you kidding me????? I needed a housing counselor and not a therapist!!! My efforts were all sent to the Counselor in the HAMP program and NOW I have received an email from him stating I have been denied a trial mod and my file has been closed due to my inability to provide financial documentation!!!!!!!

How about just enforcing the law?
That isn’t happening because we have a completely corrupt political system that abrogates all individuals’ rights.
Those that accuse Obama singularly have very short memories….....This administration inherited (the president did) the financial mess created by the most recent one…the Bush 2…..
Until laws are enforced we will have no “closure” to this mess.
Don’t hold your breath!

@  sierra - the Bush admin’s crappy loan mod programs folded and the Obama gang rolled out HAMP. He announced it in Feb. 2009, in a speech in Az. that you can see on You Tube. He mentioned helping 7-9 million homeowners with workouts. Look it up: the speech is about 8 mins. long and he drops that promise just after minute 3.
Even Obama’s most blinkered fans have dropped the “he inherited this” line. And rightfully so - these programs were Obama initiatives by Obama appointees.
Obama was all about help when the cameras were rolling and the crowd was applauding (this was when people still applauded him.)
On Oct. 28, he told a group of “progressive” bloggers that HAMP was so little used out of an abundance of caution against fraud. So the 7-9 million people has been cut to a half million or less, many with crappy in-house mods (not HAMP mods) that glom on fees and balloon payments. Further enriching the….banks. No concern *there* about fraud, eh, Barry? lol.
Happy You Tubing!

acmodspecialists

Dec. 9, 2010, 4:12 p.m.

AdriAnne welcome,  in to the world of dealings with banks this is nothing what your dealing with compare to other people Banks strategy is to give you the runaround until you either quit requesting a modification or let your house go You should request in righting the reason for the denial
Here are some of their usual excuses:
1-The Investor does not approve the modification (but when we contested and request to know who is the investor then they tell us to send more docs)
2-You did not pass the NVP Test (but when we request to see the NVP calculations 99% of the time are wrong)
3- You mod was denied because We did not receive documents requested (but when we sent proof of docs sent via certified mail and fax transmissions sheets suddenly those docs reappear)
4- Not sufficient income ( but when request what income they have documented is usually less and we have to go over with the income detail by detail to correct it )
and goes on and on…(to long to write here)

Here is who you dealing with (copy paste)

huffingtonpost.com/2010/12/08/homeowners-wrongfully-foreclosed-upon_n_794194.html

Unfortunately, the longer this goes on, the more property values will DROP which will affect the rest of us homeowners who ARE paying our mortgages.  Prices won’t rise if Buyers keep thinking that this will keep going on for the next 5 years.  Why buy now if the house will be worth less next year?

Joe you are so right but do you think the banks care?  Furthermore anyone who even thinks about purchasing a forecloused property without getting a clear title first is just plain crazy.  I predict that there are gonna be a whole lot of people coming back to reclaim houses that they were wrongfully put out of.

Add a comment

Email me when someone responds to this article.