Nevada sues major foreclosure processing firm
This post has been updated. See below for details.
Nevada has filed suit against a major player in the foreclosure business, Lender Processing Services, claiming the company is responsible for perpetrating widespread consumer fraud in the Silver State.
The lawsuit against Florida-based LPS and several of its subsidiaries alleges that the company falsified, forged or fraudulently filed “countless” documents in foreclosure cases across the Silver State, requiring employees to execute or notarize as many as 4,000 foreclosure documents a day. The company is used by many major banks to process foreclosures, and the suit said the company is responsible for more than 50% of foreclosures annually.
“The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed,” Atty. Gen. Catherine Cortez 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.”
The suit also alleges that the company fraudulently notarized documents and forged signatures and hid the scope of the problem by “misrepresenting” that the problems were clerical errors. The suit also alleges that LPS imposed “inappropriate and arbitrary” deadlines on foreclosure attorneys working for them, leading to errors in the foreclosure process.
The suit also alleges the company blocked communication between those attorneys and their clients and demanded improper referral fees from those attorneys.
[Updated at 1:25 p.m., Dec.16: LPS, in a statement, said it had been cooperating with Masto’s office for more than 14 months, and that it would defend itself against the suit “vigorously.”
The company also accused Masto’s office of violating Nevada law by using a Washington firm, Cohen Milstein Sellers & Toll, to investigate the company. The company said that it has discovered problems with its past document practices, but added, "The company is not aware of any person who was wrongfully foreclosed upon as a result of a potential error in the processes used by our employees."]
— Alejandro Lazo
Photo: A bank-owned home for sale in Las Vegas. Credit: Robyn Beck / AFP/Getty Images