Dec 09, 2010
Quick quiz: If you were a foreclosure processor
09 Dec 2010
Posted by Andrew Kantor
If you were a foreclosure processor, and one of your divisions had been caught "robo-signing" forms and otherwise filing fraudulent documents to take homes, would you:
A. Fire the folks responsible and clean up your act?
B. Work with the government and banks to find a way to speed processing and still remain legal?
C. Lie to investigators, investors, and the press about stopping the practice, while in fact continuing it; and also continue a slew of probably-illegal and -fraudulent practices even while being the subject of a federal criminal investigation?
You and I might have picked A or B, but Reuter’s reporter Scot J. Paltrow found that Lender Processing Services (which handles more than half of the foreclosures in the country) apparently opted for C.
In one of the best pieces of real journalism I’ve seen in a while, he lays out the details in this article; here are a few choice nuggets:
In his October 29 conference call with analysts, [LPS CEO Jeff] Carbiener said that when the company discovered the [LPS subsidiary] DocX wrongdoing in December 2009, it immediately stopped it and soon shut DocX down. But it turns out that DocX continued operating much longer than LPS originally had acknowledged. In a written response last week to questions from Reuters, LPS’s Kersch confirmed that DocX actually wasn’t closed until August 2010.
Reuters has learned that rather than stamping out the practice, LPS in December 2009 began transferring signing operations out of its own offices and into those of firms it has close relationships with.
How wonky were things?
Equally difficult to explain are mortgage assignments signed by LPS Minnesota employees purporting to be officers of lenders that no longer existed. For example, in January 2010, two Minnesota employees jointly signed one as officers of Encore Credit Corp., defunct since 2008.
On other occasions, LPS employees signed as authorized officers of American Brokers Conduit, well after the subprime lender had been liquidated in bankruptcy.
When something bad happens, there are people who work to help, people who work to profit, and people who work to scam. Two are good. The others, hopefully, get what they deserve.