Nevada AG Sues LPS For Robo-Signing, Fee-Splitting

Nevada AG Sues
LPS For Robo-Signing, Fee-Splitting Nevada Attorney General Catherine Cortez Masto has sued Lender Processing Services Inc. (LPS) and several of its subsidiaries, including DOCX LLC and LPS Default Solutions Inc., for allegedly engaging in deceptive practices against Nevada consumers.

The lawsuit, filed Dec. 15 in the 8th Judicial District of Nevada, includes allegations of widespread document execution fraud, deceptive statements made by LPS about efforts to correct document fraud, improper control over foreclosure attorneys and the foreclosure process, as well as misrepresentations about LPS' fees and services. The suit also claims that LPS and its subsidiaries sacrificed accuracy in the foreclosure process in an attempt to maximize the speed and volume of foreclosure files processed.

"The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed," Masto said in a statement. "We will protect the integrity of the foreclosure process. This lawsuit is the next, logical step in holding the key players in the foreclosure fraud crisis accountable."

According to Masto's lawsuit, LPS stands accused of requiring employees to execute or notarize up to 4,000 foreclosure-related documents every day; imposing "inappropriate and arbitrary" deadlines that turned attorney firms into foreclosure mills; obstructing communication between foreclosure attorneys and their clients; and demanding a kickback from foreclosure firms for each case referred to the firm by LPS.

LPS allowed these fees to be misrepresented as "attorney's fees" on invoices delivered to consumers and submitted to Nevada courts, says Masto, whose office interviewed servicers and former LPS employees, as well as reviewed more than 1 million pages of relevant documents.

According to Masto's office, former employees and industry professionals "describe LPS as an assembly-line sweatshop, churning out documents and foreclosures as fast as new requests came in and punishing network attorneys who failed to keep up the pace."

In a response, LPS said it strongly disputes the allegations and plans to "vigorously defend" against the complaint.

LPS said it cooperated with the investigation by Masto's office for more than 14 months, but that its efforts to engage in meaningful discussions with her office were undercut by Masto's decision to outsource the investigation to Washington, D.C.-based Cohen Milstein Sellers & Toll PLLC. That outsourcing arrangement appears to violate Nevada law, says LPS, adding that Masto's complaint "highlights misconceptions about LPS and seeks to sensationalize a variety of false allegations in a misleading manner."

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