Blog
Senator Requests DOJ Investigation of LPS Related to Fees, Double-Billing
According to the Wall Street Journal, Senator Ron Wyden (D-OR) has sent a letter tornthe Department of Justice requesting an investigation of Lender ProcessingrnServices (LPS). The letter, sentrnyesterday to Attorney General Eric Holder, alleges that LPS may have used anrnimproper fee structure for legal services related to the processing ofrnforeclosures and bankruptcies. Thisrnstructure, Wyden says, resulted in double-billing homeowners and mortgagerninvestors. </p
The Democratic Senator also said that actionsrnby the firm may have directly led to the mass production of mortgage documentsrnknown as robo-signing. In January LPSrnsettled a suit with 46 states and the District of Columbia over claims its nowrndefunct subsidiary DocX engaged in a six-year scheme to prepare and file more than 1 million improper mortgage documents. The former CEO of DocX, Lorraine Brown, pledrnguilty in federal court last November to participating in the scheme, part ofrnthe so-called robo-signing scandal, and is awaiting sentencing. LPS agreed to pay $127 million in the staternlevel settlement and also agreed to pay $35 million to the Department ofrnJustice in February concerning a federal investigation of DocX.</p
LPS, based in Jacksonville,rnFlorida, provides software and other technologies to mortgage lenders and managesrna database of nearly 40 million loans. rnIt provides frequent reports on loan performance most of which arernsummarized and published by MND. </p
Nick Timiraos, writing for The Journalrnsaid Wyden’s letter identified concerns brought to the Senators office by anrnunnamed industry professional. Wyden’srnstaff found the allegations credible after reviewing them with knowledgeablernparties including government regulators. </p
The letter states that banks agreed to use foreclosure-related legalrnservices provided by an LPS network of law firms in return for receiving freernaccess to the firm’s mortgage-processing software. LPS would then charge homeowners or mortgagerninvestors for those services, even though LPS itself was not providing anyrnlegal services. As a portion of a borrowers’rnmonthly payment is supposed to cover the costs of loan servicing, chargingrnborrowers or investors for legal services could constitute double billing, thernletter says.</p
It also charges that, by “carving off a significant percentage of the monies</bthat should fund the legal work of law firms, LPS has made it difficult forrnfirms to operate efficiently." Thesernpractices, Wyden wrote, could have contributed to "devaluing the system's legalrnchecks and balances and rewarding the quantity of work over its quality, I dornnot think it was surprising that robo-signing became common practice." </p
The Journal quotes MichellernKersch, a spokesperson for LPS as calling the letter’s allegationsrnincorrect. “In fact, over the lastrnseveral years,” she said, “federal and state courts across the country haverndismissed 15 civil cases that were based on the same failed allegations.”</p
Kersch said that LPS doesn’t charge or pass any fees along to borrowers, andrnthat technology and service fees are billed only to parties that use LPS’srnproducts. The company also said that it doesn’t provide legal services and thatrnit has no involvement in setting attorneys’ fees.</p
Timiraos said some of the letter’s allegations were included in arnshareholder class action lawsuit filed two years ago by a pension fund for cityrnemployees of St. Clair Shores, Michigan which was originally dismissed by arnfederal judge. After it was re-filed LPSrnagreed to settle for an undisclosed amount without admitting guilt. </p
The Justice Department told ThernJournal it is reviewing the Senator’s letter which also asks whether thernDepartment had reviewed the LPS business practices and whether Congress can dornanything to increase transparency for fees that accrue when borrowers becomerndelinquent.
All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.
About the Author
devteam
Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
See all blogsLatest Articles
By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...
Late-Stage Delinquencies are SurgingAug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...
Published by the Federal Reserve Bank of San FranciscoIt was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...
Comments
Leave a Comment