California attorney general subpoenas foreclosure firm LPS

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California Atty. Gen. Kamala D. Harris said Wednesday she had subpoenaed the behemoth foreclosure-processing firm Lender Processing Services as part of an ongoing probe into home repossession practices in the Golden State.

The Jacksonville, Fla., firm was at the center of the so-called robo-signing scandal last year, in which banks employed people to sign documents used in foreclosures. Single individuals per day signed thousands of such documents, with the employees many times not even reading or understanding the documents they were signing.

LPS was used by many of the largest mortgage lenders and servicers in the country, and former LPS employees have testified that documents were “robo-signed” there, Harris said in a statement Wednesday. According to media reports, the types of documents signed by company employees were papers that proved ownership of a home in a foreclosure case. Such papers are required for major financial institutions to foreclose on a borrower in a majority of states, including California.

Harris warned that California homeowners and other borrowers in so-called non-judicial foreclosure states -- where the court system does not oversee the foreclosure process -- were particularly at risk by this kind of robo-signing.

“California homeowners have been exposed to fraud and crime at every step of the mortgage process,” Harris said. “Justice demands we come to their aid, and a key step in that is to investigate robo-signing and the potential for inaccurate or unjust foreclosures.”

A representative for LPS could not immediately be reached for comment.

The attorney general has said that pursuing faulty foreclosure practices and mortgage fraud will be a top priority. On Monday, Harris announced the creation of a mortgage fraud task force that she said will investigate and prosecute mortgage fraud throughout the state. California is also a key member of an ongoing probe by attorneys general of all 50 states into the foreclosure practices of major banks.

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-- Alejandro Lazo