Two state AGs subpoena LPS, National Title in robo-signing probe
The investigation into robo-signing at mortgage servicing firms grew more intense Wednesday with attorneys general in California and Illinois issuing subpoenas to Lender Processing Services Inc. (LPS). Illinois Attorney General Lisa Madigan also subpoenaed National Title Clearing Inc. The AGs' actions show LPS is once again in the line of fire as state regulators continue to probe mortgage servicing practices of firms handling foreclosures in the midst of a prolonged national housing downturn. A spokesperson for LPS could not immediately comment on the allegations, saying the firm has yet to receive the subpoenas. Nationwide Title Clearing also issued a statement saying it "has not yet been served a subpoena from the Illinois Attorney General and therefore cannot comment on the specifics at this time." The Florida-based firm added that it intends to cooperate with the AG's office and "welcomes the opportunity to help clear up common misconceptions surrounding this issue and wishes to help the public gain a deeper understanding of normal mortgage industry documents and processes." This is not the first time LPS has landed in state regulators' sights. Michigan Attorney General Bill Schuette announced in late April his office would be investigating questionable mortgage documentation filed in his state's register of deeds offices. Documents tied to DocX, a subsidiary of Lender Processing Services, are at the center of that probe. Illinois' Madigan said the latest subpoenas are part of a larger investigation into alleged fraudulent practices used by banks and other mortgage institutions. Both firms in her subpoena request make their money by providing clients with document preparation and loan management services. Madigan is investigating allegations LPS and Nationwide Title Clearing engaged in the robo-signing of legal documents tied to foreclosure cases. Robo-signing refers to the mass signing of foreclosure affidavits with the signers having little or no knowledge of the information contained in the documents. LPS offers servicing support to 80 financial institutions and handles approximately 30 million mortgages, according to the Illinois AG. Meanwhile, the subpoena issued by California Attorney General Kamala Harris is limited to LPS and ties back to her agency's ongoing probe into the robo-signing of mortgage documents and other alleged practices that may have hurt borrowers facing foreclosure. Warning that robo-signing is a "particularly dangerous" practice in nonjudicial foreclosure states like California, where the courts do not oversee the foreclosure process, Harris said the subpoena is needed to get to the bottom of some of the issues surrounding the state's mortgage mess. The California AG subpoena asks for data back to Jan. 1, 2007. Write to Kerri Panchuk.