No sooner had California Attorney General Kamala Harris set up a Mortgage Fraud Strike Force than her crew mailed out subpoenas looking for documents on alleged “robosigning” of foreclosures.
The moniker, “Robosigning,” attached to the practice of mortgage servicing outfits signing thousands of documents a day on papers used to foreclose on homes without verifying the documents’ accuracy.
Harris announced Wednesday that her strike force lawyers went after Lender Processing Services, Inc., a Jacksonville, Florida firm with offices in California.
Former LPS employees have testified that LPS employees “robosigned” foreclosure documents, according to Harris. And these papers were recorded on behalf of the largest mortgage lenders and servicers in the country.
But Harris isn’t breaking new ground here. There were at least two class actions filed last fall, one in Kentucky state court focused on LPS and the other in Mississippi federal bankruptcy court, centered on Prommis Solutions, both over alleged robosigning. And in December, a union pension fund sued in Delaware to oust the LPS board of directors over what it called “assembly-line” processing of foreclosures.
So Harris’s mortgage fraud hunters should find plenty of paper. The state wants documents from Jan. 1, 2007 until as late as June 24 of this year.
LPS claims to provide servicing on more than half of all U.S. mortgages, representing 80 financial institutions. The firm services 30 million loans with outstanding balances of $4.5 trillion.
In some states foreclosures must go through the courts where they are reviewed by judges. That’s not the case in California, which is a non-judicial foreclosure state. Typically courts here don’t get involved in overseeing foreclosure. That makes challenging the allegations of robosigning particularly tough for individual homeowners.