Conn. Attorney General Questions GSEs And LPS About Attorney Networks

ticut Attorney General Richard Blumenthal, as part of an investigation into the state's foreclosure business, has requested information from Lender Processing Services Inc., Freddie Mac and Fannie Mae concerning their process for selecting law firms in foreclosure proceedings. Blumenthal is investigating reports that a majority of Connecticut foreclosures are assigned to only a few select law firms and complaints by consumers who said they did not receive proper foreclosure notices from marshals. In [link=http://www.ct.gov/ag/lib/ag/consumers/ctdefaultservicing.pdf][u]letters[/u][/link] to LPS and the GSEs, Blumenthal requested specific information related to the process of developing attorney networks and selecting law firms. Two firms, Hunt Leibert Jacobson in Hartford and Bendett & McHugh in Farmington, file almost two-thirds of Connecticut's foreclosure actions, according to the [link=http://www.courant.com/business/hc-foreclosure0609jun09,0,4333572.story][u]Hartford Courant[/u][/link], whose report last year on the situation inspired Blumenthal's investigation. According to disclosure forms, State Marshal John Fiorello is referred about half of the firms' process-serving work. He leads a small group of marshals and reportedly received more than $2.2 million in business from Hunt Leibert last year, while Bendett & McHugh directed about $762,000 of work his way. ‘Dominance over foreclosure service by a few select law firms and marshals has spurred complaints about improper or illegal practices – wrongfully allocating work to non-marshals, forging papers, failing to serve papers and making kickbacks,’ Blumenthal said in a statement. ‘Concentrating this work in a few hands can be severely problematic – causing unconscionable costs and failed notice delivery." Blumenthal has requested that LPS, Fannie Mae and Freddie Mac detail the inner workings of their attorney networks and default practices in Connecticut. He has asked the companies to identify the following: [list] all law firms in Connecticut that have provided the companies with legal services relating to foreclosure actions from 2007 to the present, *the criteria used in selecting law firms to handle foreclosure work, *the number of foreclosure actions filed from 2007 to present in Connecticut for which each enterprise has retained counsel, and *lenders to whom default servicing is provided.[/list] Fannie Mae spokesperson Brian Faith told [link=http://online.wsj.com/article/BT-CO-20090608-712660.html][u]The Wall Street Journal[/u][/link] that the company will cooperate with Blumenthal's investigation, and LPS spokesperson Michelle Kersch said Blumenthal's letter has not been received, but when it is received, LPS will respond to his request for information. ‘Law firms that utilize LPS' technology are selected by the servicer or designated by the investor. As such, LPS' network of attorneys is comprised of the law firms that are selected by its servicing clients,’ she told the paper. SOURCE: Office of Richard Blumenthal, WSJ, Hartford