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Nevada attorney general issues fraud accusation
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Catherine Cortez Masto
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LAS VEGAS REVIEW-JOURNAL
Nevada's attorney general has accused the nation's largest lender services company, Lender Processing Services Inc., of participating in a widespread fraud involving robo-signings and other deceptive practices.
Attorney General Catherine Cortez Masto said Friday that the decision to sue followed an extensive investigation into the company's default servicing or residential mortgages in Nevada, specifically loans in foreclosure.
The lawsuit, filed Thursday in Clark County District Court in Las Vegas, includes allegations of widespread document fraud and improper control over foreclosure attorneys and the foreclosure process.
"The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed," Masto said in a statement, "We will protect the integrity of the foreclosure process. The lawsuit is the next logical step in holding the key players in the foreclosure fraud crisis accountable."
Lender Processing Services, based in Jacksonville, Fla., required employees to execute or notarize as many as 4,322 foreclosure-related documents a day, Masto said. The lawsuit asks for penalties of up to $17,000 per violation of the law.
Lender Processing Services said Friday it "strongly disputes" the allegations made in the complaint and plans to "vigorously defend" itself.
"LPS has cooperated with the attorney general's office for more than 14 months to resolve its inquiry," the company said. The lender services firm also accused Masto of improperly using a Washington, D.C., law firm in the investigation.
"The complaint highlights misconceptions about LPS and seeks to sensationalize a variety of false allegations in a misleading manner," the company said in a statement.
Lender Processing Services shares lost $3.04, or 17.53 percent, Friday to close at $14.30 a share on heavy volume of 7.8 million shares traded on the New York Stock Exchange.
The civil court filing follows the announcement that Nevada for 59 consecutive months has led the nation in foreclosures. Fidelity National Information, LPS Default Solutions Inc. and other subsidiaries of Lender Processing Services were charged in the attorney general's complaint.
Last month, Lender Processing Services officials Geraldine Ann Shepard and Gary Randall Trafford were indicted on more than 600 counts related to a robo-signing scheme that generated tens of thousands of fraudulent foreclosure documents in the Las Vegas region.
The attorney general's lawsuit against Lender Processing Service alleges, among other things, that the company:
■ Fraudulently notarized documents without ensuring that the notary did so in the presence of the person signing the document.
■ Schemed to forge signatures on key documents so that volume and speed quotas were met.
■ Concealed the scope and severity of the document execution fraud.
■ Improperly directed or controlled the work of foreclosure attorneys by imposing inappropriate and arbitrary deadlines that forced them to churn through foreclosures at a rate that sacrificed accuracy for speed.
■ Demanded a "kickback/referral fee" from foreclosure firms for each LPS referral, and misrepresented it as "attorney fees" on invoices passed on to Nevada consumers and submitted to Nevada courts.
As of 2010, default management services compromised the largest part of Lender Processing Services' business, accounting for 43 percent of the company's total revenue of $2.44 billion. At least a dozen state and federal agencies have launched civil investigations of Lender Processing Services' role in the foreclosure process, according to the 39-page complaint.
On April 13, Lender Processing Services entered a consent order with federal investigators, including the Board of Governors of the Federal Reserve. Under the consent order, Lender Processing Services is required to "remediate improperly executed mortgage documents and to audit, monitor and correct its deficient default business practices."
Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.
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Any delay in the foreclosure process damages the recovery of the Nevada economy. All foreclosures were legitimate, only inconvenient steps were skipped. Just a way for the AG's lawyer friends to make more money.
Shadow....No, Im not an attorney. The millions in payouts would go to the buyers after foreclosure, when they have to give the house bank and unwind the deal, because the foreclosure was done via fraud. So the victim would be the buyer from the bank, with title insurance. The owner who was foreclosed on, and had their house taken without proper documentation that was legitimate, would also be damaged to the tunes of thousands of dollars and in some cases more. Its a MASSIVE MESS, and one that will probably have to have federal legislation to resolve , because it will cost billions in litigation and verdicts .
Masto - is motivated politically - It's an effort to slow the foreclosure process - basically delaying bad news for political purposes. Vote Her OUT.
Folks - WE NEED People in office that have American Values, Principles & Traditions. The type that made US the Strongest, Bravest, most Prosperous nation on earth.
Help Restore America! Vote RIGHT!.
LPS should vigorously defend this lawsuit and bring a Counterclaim against the AG for abuse and damages. LPS should seek millions too.
BIG QUESTION- what does the AG do with the millions they get in shaking down businesses? The AG is basically a business. If I don't get a check from the AG as an under-water borrower in Nevada, then that AG is way more dirty than the businesses they shake down!
@paul.j wrote:"...dont be surprised if we see massive payouts by title insurance companies..."
H'mmm. You wouldn't by any chance be an attorney would you? Should victims be calling you now?
Great Job by our Attorney General. I appreciate our top law enforcement officer standing up for the citizens of our state, and doing what is in the publics interest. So often the government is against the people it seems, but in this instance, I congratulate our AG for doing the right thing, and taking over 14 months to get the story right. THis is litigation that will go on for years, and dont be surprised if we see massive payouts by title insurance companies for what appears to be a massive fraud by these servicing companies.
@Joanne.Ready,,Nothing will come out of this but slaps on the hands and some fines. The housing collapse involves so many people and entities, including federal and state failures, actually corruption. Government now, our AG, is just finding the weakest scapegoats they can find. Everyone knew they were doing something wrong and nothing good could come out of their actions. From unqualified buyers, real-estate sales people, builders, title companies, many mortgage companies, banks and state governments, which were salivating over all the higher property taxes they were going to collect. In the end only the honest people, the victims of an unknown number of crooks pay the price. Crime in this case has paid well for the crooks and there will be no justice and our costs are just beginning not ending.
Bof A was one of the first to purchase ANY loan that was rejected somewhere else!!!!!!!!!!!!!!!!!!!!!!!!!!!! I know because I was a Mortgage Underwriter here for 23+ yrs, fired by 2 Major lenders because i would NOT JUST sign my name. I was told by the owner of one company that I was hired to CLOSE THE LOAN( 99 % were BUILDER loans, already under contract. When I rejected or suspended the loan, it was taken back and "reconfigured" and given back to ME! FRAUD,!!! so of course I spent many hours pulling guidelines, meetings and being called on the carpet for not being a "team player". The Attorney General should call me, I can still provide NAMES, but then the other shoe would fall and Las Vegas would really TANK!!!!!!!!!!!!!!!!!!!!!!!!!!!!! FRAUD is still going on, by the SAME PLAYERS!!!!!!!!!!!!!!!!!!!!!!!
Where's the beef? To get a significant decision from the court, Ms. Masto will need to prove someone was actually damaged by these signing practices. These offenses look like technicalities worthy of only minor penalties.