For some time, I have been exposing the fraud that is the
Lender Processing Services (and mortgage servicers in general) business
model.  I have discussed how it is so
revered by the mortgage servicing community because it will do anything, legal
or illegal, to help a mortgage servicer foreclose your home.

 

It’s one thing when a small-time litigator from
Jacksonville, Florida makes accusations (that’s me), and then it is another
thing when 60 Minutes does it.  It’s
something even more when the federal regulators recognize LPS’s shenanigans,
but when a federal judge confirms everything I (and many other lawyers) have
been saying for years about LPS, you know LPS is in trouble.

 

Who is LPS?  LPS
(formerly known as Fidelity National Default Solutions) is a default servicer
for one out of every two mortgages in this country.  It lurks in the shadows of the mortgage
industry like a hit-man for the mob, and when LPS whacks you, you never see it
coming.

 

Needless to say, LPS has had a BAAAAAD April, and the month’s
only half over.  It all started with the
60 Minutes report, Mortgage paperwork mess: Next housing shock? In the report,
Scott Pelley describes the epidemic of forged mortgage documents created by LPS
Default Solutions and their super-human employee, Linda Green.  I say super-human, because Ms. Green is
vice-president of 20 banks, and she can execute thousands of mortgage
assignments every day.

 

Well, as it turns out, Ms. Green isn’t so super, and she’s
not human – at least not one human.  In
fact, a dozen LPS employees were signing Linda Green’s name, thousands and
thousands of times over, on key documents necessary to foreclose on homes.  These documents, to add that “authentic
touch,” were all notarized by other employees who also knew they were committing
fraud.

 

Then a couple of days ago, a joint report by the Federal
Reserve, Office of Thrift Supervision and Office of the Comptroller of the
Currency found significant irregularities in the foreclosure activities of the
nation’s largest mortgage lenders, including default servicer LPS, and ordered
those lenders to “remediate all financial injury to borrowers caused by any
errors, misrepresentations, or other deficiencies.”

 

LPS and the other dirt-bag mortgage servicers – including
Citibank, Bank of America, JPMorgan Chase and Wells Fargo – signed Consent
Orders agreeing to change their evil ways and come clean.  But in typical LPS double-speak fashion, an
LPS representative responded to the consent order by stating, “The Order does
not make any findings of fact or conclusions of wrongdoing, nor does LPS admit
any fault or liability.”  Um, o.k.  Sooo….

 

Now the doozie – The one that is sure to spell the beginning
of the end for LPS: A federal bankruptcy judge took the testimony of an LPS
employee and found that, based upon that employee’s testimony, LPS has
concocted a scheme for committing fraud as a common business practice.

 

In her lengthy, scathing opinion, the Honorable Elizabeth W.
Magner (a bankruptcy Judge from New Orleans) detailed the unbelievable
testimony of Ms. Dory Goebel, an LPS employee who was caught posing as
Assistant Secretary for Option One Mortgage Corporation.  The Memorandum Opinion reads like the last
chapter of a Grisham novel, where the bad guy is exposed and the little guy
wins the day.

 

Ms. Goebel filed an Affidavit in the Wilsons’ bankruptcy
case as evidence that Option One should be allowed to remove itself from the
Wilsons’ bankruptcy to foreclose on their home. 
Ms. Goebel testified in the affidavit that the Wilsons had failed to
make necessary mortgage payments entitling Option One to relief from the
bankruptcy stay.

 

The only problem with Option One’s affidavit is that it was
absolutely false because the Wilsons had made all required payments.  After multiple hearings, Option One’s lawyer
admitted to the judge that the Wilsons were in fact current and that his only
contact was not Option One at all – it was LPS.

 

Knowing she was on to something, Judge Magner ordered Option
One, LPS, Dory Goebel and all the law firms involved be investigated to unearth
exactly how and why Option One filed its motions in the Wilsons’ bankruptcy
case.

 

What transpired was a most stunning series of admissions:

 

Dory Goebel isn’t an Assistant Secretary for Option
One.  She’s an employee of LPS.

Option One had no control over the debtor’s file once in
bankruptcy.  LPS controlled every aspect
of the Wilsons’ file.

Bankruptcy payments were sent to Option One and not entered
into LPS’s system.  Option One notified
LPS that it had the bankruptcy payments LPS accused the Wilsons of not paying.

The problems with the Wilsons’ account had occurred because
LPS failed to log their bankruptcy into the system.

Option One’s lawyers initially did not tell LPS that the
debtor’s claimed to have made all bankruptcy payments.

Although the affidavit signed by Ms. Goebel referred to
attachments thereto, there are never any attachments to such affidavits, and
she never verifies the truthfulness of any affidavit she signs.  She merely compares the numbers on a page
with numbers on a computer screen.  She
does not review any information in the loan file, even if it is available.

Ms. Goebel signs dozens of affidavits per day, spending
about five minutes on each file.

Even if Ms. Goebel knew the information contained in the affidavit
were patently false, she would have signed it anyway because an attorney
created it.

Ms. Goebel followed the procedures in place at LPS.  In other words, every single affidavit
executed within the walls of LPS is just as false as the one filed in the
Wilson case.

Judge Magner summarized her outrage as follows:

 

Default affidavits are a lender’s representation as to the
status of a loan. They are routinely accepted in both state and federal courts
in lieu of live testimony. They are an accommodation to the lending community
based on a belief by the courts that the facts they present are virtually
unassailable. The submission of evidence by affidavit allows lenders to save
countless hours and expense establishing a borrower’s default without the need for
testimony from a lending representative. While they can be refuted by a
borrower, too often, a debtor’s offer of alternative and conflicting facts is
dismissed by those who believe that a lender’s word is more credible than that
of a debtor. The deference afforded the lending community has resulted in an
abuse of trust. [Emphasis added.]

 

To the millions of homeowners with mortgage foreclosure
cases (past and future) involving LPS, Judge Magner’s Memorandum Opinion, is
absolutely priceless.  Hopefully, state
court judges presiding over foreclosure cases will keep a worn, dog-eared copy
of this opinion close at hand.

 

And hopefully, LPS days are numbered.

 

 

 

<< OlderNewer >>

Related Posts

Can My New Lender Charge Me A Late Fee If I Paid The Old
Lender On Time?

 

by Andy Miofsky, Illinois Bankruptcy Attorney

No, if you paid your original lender on time, the new lender
cannot charge you a late fee for the first 60 days after a transfer, according
to the federal Real Estate Settlement Procedures Act.  Plus, each lender is required to give you
notice 15 days before your payment is due when an account is […]

Click to continue