Senator Urges Justice Department to Investigate LPS
Sen. Ron Wyden, D-Ore., is raising concerns about the business arrangements Lender Processing Services has with mortgage servicers and the billing practices of the default management vendor.
And the Oregon senator is urging the Department of Justice to investigate what appears to be a “scheme to double-bill customers” for default management services. LPS based in Jacksonville, Fla., denied the allegations.
Wyden learned of Lender Processing Services’ alleged practices from a mortgage professional and his office conducted an investigation.
In a letter to Attorney General Eric Holder, the senator claims the ramifications of complex arrangements LPS has with servicers and law firms “go well beyond a fraudulent fee structure.”
It has “fostered an environment in which foreclosure was seen as an optimal outcome and shortcuts—such as robo-signing—were inevitable,” the March 7 letter says.
“The allegations in the letter are incorrect,” LPS said in a statement. “In fact, over the last several years, federal and state courts across the country have dismissed 15 civil cases that were based on the same failed allegations.”
Lender Processing Services also noted that it is not involved in the collection or reimbursement of any other fees charged by a servicer or investor with respect to enforcing their rights against a borrower.
Wyden acknowledges that LPS has faced down numerous state and investor lawsuits. And the vendor is currently subject to an independent audit by the Federal Reserve Board.
Despite all these allegations, “no one has been able to put together a complete picture of how LPS muscled its way into becoming the dominant force in the default mortgage servicing market,” the Wyden letter says.
The Justice Department did not respond to a request for comment.