Foreclosure Fraud in Florida Prompts AG Consumer Investigation

The Florida Attorney General’s Office has opened an active public consumer-related investigation on Lender Processing Services, a foreclosure firm that owned DocX, whose founder was just convicted of conspiracy to commit mail and wire fraud. loanapplication.jpg

Our Miami foreclosure lawyers aren’t sure what the exact implications could be, but we do know that Lender Processing Services partners with 50 of the country’s biggest banks to process mortgages and foreclosures throughout the country – including in Florida.

The conviction of DocX Founder Lorraine Brown was somewhat disappointing in that the plea agreement held the banks who were working with her as victims in the whole scheme, which involved illegally prepared and notorized mortgage documents by the hundreds of thousands. In fact, prosecutors allege that unqualified workers were hired for this specific purpose.

LPS acquired DocX several years ago.

Going at least as far back as 2005, prosecutors say Docx was allowing falsification and forgery of these records, though this was allegedly unbeknownst to LPS or their banking clients. Still, this seems suspect, given the fact that DocX was churning out mortgage documents at breakneck speed for rates that seemed impossible.

Well, the rates were impossible because, simply, it wasn’t possible to pay qualified people that amount to conduct business as it should have been done in the amount of time they were doing it. To be sure, it was incredibly profitable for both DocX and LPS – but it’s a stretch to think anyone working with these firms could have believed it was legitimate.

Brown will serve two years in prison, but Florida homeowners will still be left high-and-dry because the banks won’t be held at fault for their lack of proper documentation in these proceedings.

The hope is that Florida’s attorney general, in the course of this public consumer investigation, may be able to garner more relief.

Brown was being prosecuted in Florida, as her company was based in Jacksonville, but it was being handled at the federal level by the U.S. Department of Justice.

This new case involves state officials – and LPS, directly. According to the brief summary of the allegation on the AG’s website, DocX produced numerous documents, called Assignments of Mortgage, that even to someone who was not expert, would be obviously forged or fabricated. The signatures of supposedly the same individual varied “wildly” from document to document.

These are the same records, mind you, that are used in order for the plaintiff in a foreclosure case, ie, the bank, to obtain standing. That is, this is what allows the financial institution to say, “We own this property, we are allowed to foreclose on it.”

But when they can’t get these documents, due to the fact that many banks relief too heavily upon the MERS system of property recording, they have to rely on these phony documents. These were records that have been held up in court during foreclosure cases as “real” documents of assignment. This is despite the fact that, again, they are clearly fraudulent.

Given that Florida is essentially Ground Zero of the housing bubble burst, it’s no wonder that the attorney general’s office is assisted in pursuing this case. Let’s hope that the effort is successful and the end result has some teeth.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Case #L10-3-1094, Active Public Consumer-Related Investigation on Lender Processing Services Inc., Florida Attorney General’s Office, Economic Crimes Division in Tampa
More Blog Entries:
Foreclosure Watch: “Worst” Robo-Signing Company Exec Pleads Guilty, Nov. 21, 2012, Miami Foreclosure Lawyer Blog