Schuette announces civil settlement with mortgage document processor over fraudulent robo-signing
Updated On: Jan 31 2013 01:10:41 PM EST
Michigan Attorney General Bill Schuette announced Thursday that he had reached reached a $2.5 million civil settlement with Lender Processing Services, Inc., and its now defunct subsidiary DocX, a document processing company located in Georgia.
In November 2012, Schuette criminally charged the former president of DocX, Lorraine Brown, with racketeering for her alleged role in authorizing the fraudulent signing of mortgage documents filed in Michigan.
The felony charge against Brown and the civil settlement are the result of the Attorney General’s investigation into questionable mortgage documents filed with Michigan's Register of Deeds offices during the foreclosure crisis.
"Shortcuts like robo-signing are just one example of the damage caused by the mortgage foreclosure crisis,” said Schuette. “Our investigation into questionable mortgage practices remains ongoing, and we will bring to justice every lawbreaker we find."
In April 2011, Schuette launched an investigation after county officials across the state reported that they suspected Assignment of Mortgage documents filed in their offices may have been forged.
A"60 Minutes" news broadcast had shown that the name "Linda Green" was signed to thousands of mortgage-related documents nationwide, but with many different variations in handwriting. County officials in Michigan reviewed their files and found similar documents, thus raising questions about the authenticity of the documents filed.
In his investigation, Schuette reviewed documents prepared by DocX and filed in Michigan.
DocX processed mortgage assignments and lien releases for residential lenders and servicers nationwide.
Schuette's investigation revealed that former DocX president Lorraine Brown allegedly orchestrated a widespread scheme in which employees were directed to forge signatures on mortgage documents in order to execute these documents as quickly as possible, producing increased profits for DocX.
Internally, DocX identified this practice as "facsimile signing" or "surrogate signing." The investigation revealed that more than 1,000 unauthorized and improperly executed documents were filed with county registers of deeds throughout Michigan.
In light of the findings of the investigation, Brown was criminally charged on November 26, 2012 with one count of Conducting Criminal Enterprises (Racketeering), a 20-year felony, in Kent County's 61st District Court. A criminal charge is merely an accusation, and the defendants are presumed innocent unless proven guilty.
LPS suspended DocX’s operations in 2010, halting its work as a mortgage document processor.
The $2.5 million settlement, which includes DocX, its parent company, Lender Processing Services, Inc., and another LPS subsidiary, LPS Default Solutions, was filed in Ingham County Circuit Court.
The settlement amount is based upon estimated earnings generated from the alleged illegal conduct related to documents filed in Michigan, in addition to obligations to correct improperly executed documents when possible and take other remedial and preventative action.
Additionally, the settlement includes requirements aimed at preventing such conduct from recurring, requirements to correct documents when possible, and requirements to provide consumer support. LPS will make a toll-free hotline available for consumers who have questions about any mortgage documentation filed by DocX, and the telephone number will be posted on Schuette’s website once the hotline goes live.
National Mortgage Settlement Bringing Relief to Michigan Families
In addition to investigating robo-signing allegations in Michigan, Schuette previously joined 48 other state attorneys general in entering into a $25 billion settlement with the five leading bank mortgage servicers. The settlement addressed allegations of faulty foreclosure processes and poor servicing of mortgages that harmed Michigan homeowners. The settlement also required comprehensive reforms of mortgage loan servicing to improve customer service for Michigan borrowers.
On August 1, 2012, Governor Rick Snyder signed legislation to create the $97 million Homeowner Protection Fund. The fund will be used to help avoid preventable foreclosures, alleviate the effects of the foreclosure crisis, support law enforcement activities to prevent or prosecute financial fraud or deceptive practices, and to compensate the state for costs resulting from unlawful conduct of the defendants in the lawsuit.
More information on the National Mortgage Settlement is available on the Attorney General’s Website at www.michigan.gov/mortgagesettlement.