State AGs Sell Short in LPS Settlement But Admissions May Be Helpful to Homeowners Facing Foreclosure

The Settlement announced today between State Attorneys General and Lender Processing Services (LPS) has some important implications for homeowners facing foreclosure and those who have been foreclosed upon over the past several years.

LPS is the company that is one of the most notorious players in the foreclosure crisis. Employees of their subsidiary, Docx were profiled in a 60 Minutes Segment admitting to signing other peoples names to documents and signing documents endorsing loans, assigning mortgages and swearing to facts under oath without authorization from the company on whose behalf they were signing.

Several LPS employees have also been indicted on criminal charges in Missouri and Nevada.

These forged documents were then used and continue to be used to foreclose on homeowners from Oregon to Ohio.

If LPS were taking homes away from citizens with guns instead of forged documents, the Chief Law Officers of 46 States would not have rested until the culprits were in jail. But apparently, since LPS was just taking those houses with admittedly forged documents under their contracts with the largest banks and mortgage servicers in the country a slap on the wrist was the outcome of their “investigation.

Ohio Attorney General Mike DeWine settled out on behalf of the entire state for an LPS contribution of $2,544,990 into the budget of the Ohio Attorney General’s Office. No money for homeowners. No damages for homes fraudulently taken. No Jail for anyone.

There is a bright side for homeowners facing foreclosure. LPS has admitted in the consent decree to be filed in 46 State that it did the following:

1. Admitted that LPS produced documents had defects.
2. That documents used in foreclosures had unauthorized signatures
3. That documents used to foreclose on homeowners were not signed by the person who the documents said sign them.
4. False assignments of mortgages were recorded with clerks and recorders throughout the United States.
5. Documents used in foreclosures had notarizations that were false.

These admissions can be used on behalf of homeowners facing foreclosure to form the basis of counterclaims against lenders or to challenge the right of lenders seeking foreclosure to use the courts to take people’s homes.

The AGs fortunately did not have the power to waive those claims on behalf of individual homeowners. This development makes it more important than ever for those facing foreclosure or who have been foreclosed on since 2008 to consult with legal counsel to determine whether there are claims that can be brought against LPS or the lenders they worked for or whether there are defenses that can be raised to the right of such lenders to foreclose.

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