Nevada attorney general issues fraud accusation
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.
